What is the Current Ratio vs Quick Ratio: Formula, Calculation, and Examples for Your Business
Consider a company with $1 million of current assets, 85% of which is tied up in inventory. By excluding inventory, and other less liquid assets, the quick ratio focuses on the company’s more liquid assets. If a company’s financials don’t provide a breakdown of its quick assets, you can still calculate the quick ratio. You can subtract inventory and current prepaid assets …