Quick Ratio
Quick ratios just deduct the inventories from the current assets and then divide it with the current liabilities.
And the reason being, inventories are not that easy to convert into cash and pay off debt. Sure you can do it, but it’ll take more time than say, your accounts receivables.
So, quick ratios, or another name for it is the acid test ratio, measures whether a company can pay off its short term liabilities without selling its inventories.
And, same as current ratios, if its less than one, it means the company cannot pay it off. More than one, they can.
Patreon Link: https://www.patreon.com/user?u=36571443
Watch video Quick Ratio online without registration, duration hours minute second in high quality. This video was added by user FST Study 07 April 2022, don't forget to share it with your friends and acquaintances, it has been viewed on our site 4,83 once and liked it 16 people.