Quick Ratio Calculator (Acid-Test Liquidity Ratio)

Background.

This is the acid-test ratio from a balance sheet: liquid assets divided by current liabilities. If you came looking for the SaaS quick ratio — new plus expansion ARR divided by churned plus contraction ARR — that is a completely different metric with the same name, and it has its own page linked below. The two get confused constantly because a search for "quick ratio" returns both.

The acid test asks a harder question than the current ratio. The current ratio counts every current asset, including inventory sitting in a warehouse. The quick ratio removes the assets that cannot be turned into cash quickly enough to settle a bill this month — inventory, because it has to be sold first, and prepaid expenses, because prepaid rent cannot be handed to a supplier. What is left is supposed to be the money you could actually put on the table.

Here is the part almost every other calculator hides: there is no authoritative definition of the quick ratio, and the two formulations in general use give different answers. Formulation A builds the numerator up from named items — cash plus marketable securities plus net receivables. Formulation B subtracts from the top — total current assets minus inventory minus prepaid expenses. They agree only when the balance sheet has no "other current assets" line, and real balance sheets always do: contract assets, current tax assets, derivatives, assets held for sale. Applied to the same US manufacturing balance sheet published by the Census Bureau for 2026 Quarter 1, formulation A gives 0.72 and formulation B gives 0.96, a 34 percent relative difference. A covenant written as "quick ratio of at least 0.90" is comfortably failed under A and comfortably passed under B, on identical books. This calculator therefore makes you pick, and names the formulation beside the result rather than quietly choosing for you.

Why is there no authority? Because the quick ratio is an analytical ratio, not an accounting measure. FASB's codification and the SEC's Regulation S-X define the line items — cash at caption 1, marketable securities at caption 2, receivables net of allowances at captions 3 and 4, inventories at caption 6, prepaid expenses at caption 7 and other current assets at caption 8 — but neither ever combines them into a ratio. IFRS does the same through IAS 1. The CFA Institute's own Financial Analysis Techniques reading lists the quick ratio among the major liquidity ratios and publishes no formula for it. The nearest thing to an official liquidity ratio in US federal statistics is the Census Bureau's "total cash and U.S. Government and other securities to total current liabilities", which is narrower still because it drops receivables too — that measure is reported here as the cash ratio.

Do not treat 1.0 as a pass mark. That figure is folklore, and the primary data contradicts it immediately: the whole of US manufacturing sat at 0.72 on the strict formulation in 2026 Quarter 1, with a current ratio of 1.38 in the same quarter. Whole industries operate below 1.0 by design because they collect from customers faster than they pay suppliers. What the ratio is genuinely good for is comparison — against your own previous period-ends, against direct competitors on the same formulation, and against your current ratio. A wide gap between the two tells you your liquidity depends on selling stock; a narrow gap tells you the current ratio was already honest for your business.

One movement people routinely get backwards: collecting a receivable in cash does not change the quick ratio at all. Both the cash and the receivable are already inside quick assets, so the numerator is unchanged. It does raise the cash ratio, which is why that output sits next to the main one. Selling inventory for cash, by contrast, raises the quick ratio under both formulations, because inventory was never in the numerator and cash always is.

What is quick ratio (acid-test) calculator?

The quick ratio, also called the acid-test ratio, divides a company's most liquid current assets by its total current liabilities. It is a stricter version of the current ratio: same denominator, narrower numerator. Inventory is excluded because converting it to cash requires finding a buyer, agreeing a price and waiting for payment; prepaid expenses are excluded because they represent services already bought and cannot be used to settle an obligation to anyone else. The remaining assets — cash and cash equivalents, short-term marketable securities and receivables net of the allowance for doubtful accounts — are collectively called quick assets. The classification of any of these as current follows FASB ASC 210-10-45-1, which defines current assets as those "reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business", with ASC 210-10-45-3 requiring the longer period where the operating cycle exceeds twelve months; IFRS reaches the same test through IAS 1 paragraph 66. Because the quick ratio is analytical rather than prescribed by any standard-setter, two formulations coexist — a build-up from named liquid assets, and a subtraction of inventory and prepaid expenses from total current assets — and they diverge by exactly the size of the balance sheet's other-current-assets line divided by current liabilities.

How to use this calculator.

1. 01Choose a formulation first. Use Strict if you are the one taking the risk — a lender, or a supplier deciding whether to extend terms — because 'other current assets' is a mixed bucket whose convertibility you cannot see. Use Inclusive if you need to reconcile to a published total current assets figure.
2. 02Enter cash and cash equivalents. Check the notes first: restricted cash and compensating balances must be left out, and Regulation S-X caption 1 requires them to be disclosed separately.
3. 03Enter marketable securities and other short-term financial investments as a separate figure from cash, so the calculator can also report the cash ratio.
4. 04Enter accounts receivable net of the allowance for doubtful accounts. Do not use the gross figure.
5. 05Enter inventory and prepaid expenses. Both are excluded from quick assets under either formulation, but the calculator needs them to compute total current assets and to show you what was thrown out.
6. 06Enter everything else in the current-asset section as other current assets. This is the line the two formulations disagree about, so it is worth getting right.
7. 07Enter total current liabilities including the current portion of long-term debt, which is the item most commonly omitted.
8. 08Switch the formulation and re-read. If the answer moves materially, your quick ratio is sensitive to a definition rather than to your liquidity, and any covenant or comparison must state which one it means.

The formula.

Both formulations divide by the same denominator, total current liabilities. They differ only in how the numerator is built. The strict formulation adds up three named items: cash and cash equivalents, marketable securities, and receivables net of the allowance. The inclusive formulation starts from total current assets and subtracts inventory and prepaid expenses. Subtract one from the other and the entire difference is the balance sheet's other-current-assets line, so the gap between the two answers is always exactly other current assets divided by current liabilities.

On the worked example below that gap is $719,352M of other current assets over $2,925,504M of current liabilities, which is 0.2459 of a turn — the difference between 0.7175 and 0.9634. On the calculator's default figures the gap is $10,000 over $250,000, or 0.04, which is the difference between 0.90 and 0.94. Set other current assets to zero and the two formulations return identical numbers, which is the algebraic reason the disagreement exists at all.

Rounding happens once. Every sum, difference and quotient is carried at full decimal precision and rounded a single time at the output boundary; there is no intermediate rounding to accumulate error. The page displays ratios to four decimals and currency to two.

The coverage shortfall is floored at zero. It reports how many dollars of quick assets are missing before current liabilities would be covered in full, and it reads zero once the quick ratio reaches 1.00 rather than turning negative. The cash ratio is computed the same way in both modes, from cash plus securities only, because it does not depend on the formulation at all.

A note on what the ratio assumes. Receivables enter the numerator at book value, so the ratio takes the allowance for doubtful accounts at face value and assumes everything remaining will be collected on time. Marketable securities are assumed to be saleable at their carrying amount. Neither assumption holds in a genuine liquidity crisis, which is exactly when the ratio is most often consulted. The cash ratio, shown alongside, is the version that survives those doubts because it counts nothing that still has to be collected from anybody.

A worked example.

Frequently asked questions.

References& sources.

1. [1]U.S. Census Bureau. Quarterly Financial Report — QFR Definitions. "Total cash and U.S. Government and other securities to total current liabilities. This ratio is obtained by dividing total cash and U.S. Government and other securities by total current liabilities." Retrieved 2026-07-29.
2. [2]U.S. Census Bureau. Quarterly Financial Report for Manufacturing, Mining, Wholesale Trade, and Selected Service Industries, 2026 Quarter 1. Table 1.1 All Manufacturing balance sheet; printed ratios of 1.38 (current) and 0.34 (cash and securities to current liabilities). Retrieved 2026-07-29.
3. [3]U.S. Government Publishing Office. 17 CFR 210.5-02, Regulation S-X — Balance Sheets. Caption 1 cash and cash items (with restricted-cash disclosure), 2 marketable securities, 3 and 4 receivables and allowances, 6 inventories, 7 prepaid expenses, 8 other current assets, 9 total current assets, 21 total current liabilities. Retrieved 2026-07-29.
4. [4]Financial Accounting Standards Board. FASB Accounting Standards Codification, Topic 210 Balance Sheet, paragraphs 210-10-45-1 and 210-10-45-3. Defines current assets and the operating-cycle-or-one-year boundary; does not define the quick ratio. Free registration required at asc.fasb.org.
5. [5]CFA Institute. "Financial Analysis Techniques" refresher reading, 2025. Lists the current ratio, quick ratio, cash ratio, defensive interval ratio and cash conversion cycle as the major liquidity ratios, and supplies no numerator or denominator for any of them — the evidence that no professional body prescribes a single quick-ratio formula. Retrieved 2026-07-29.
6. [6]IFRS Foundation. IAS 1 Presentation of Financial Statements, paragraph 66 including 66(d) on restricted cash (2024 issued edition). Superseded by IFRS 18 for annual periods beginning on or after 1 January 2027, with current/non-current classification carried forward unchanged. The ifrs.org standard PDF is login-gated.
7. [7]Damodaran, A. "Working Capital Ratios by Sector (US)." NYU Stern School of Business, data as of January 2026. Receivables and inventory as a percent of sales by industry, used for the industry-variation argument. Retrieved 2026-07-29.