Quick Ratio Calculator (Acid-Test Liquidity Ratio)

Background.

A supplier is deciding whether to give a new customer 60 days to pay. The customer's balance sheet shows $460,000 of current assets against $250,000 of liabilities due within the year, a current ratio of 1.84 that looks comfortable. But $210,000 of those assets is stock on the shelves, and another $15,000 is rent and insurance paid in advance. Strip those out and the customer has $225,000 that is cash or close to it, or 90 cents for every dollar it owes in the next twelve months. That 0.90 is the quick ratio, and it is the number the supplier should be looking at.

The ratio takes its other name, the acid test, from the old assayer's trick of putting a sample in acid to see whether it was really gold. It asks a narrower question than the current ratio: if sales stopped tomorrow, could the business meet its short-term obligations from what it already holds or is already owed? Inventory fails that test because it has to be sold, and then collected, before it pays anyone. Prepaid expenses fail it because a year of insurance cannot be handed to a creditor.

What surprises most people is that no accounting standard defines the ratio, and the two versions in everyday use do not agree. One adds up named liquid assets: cash, marketable securities and receivables. The other starts from total current assets and subtracts inventory and prepaid expenses. Anything else in the current-asset section, such as contract assets, current tax receivables or assets held for sale, counts under the second version and not the first. On the US Census Bureau's figures for all manufacturing corporations in the first quarter of 2026, the first version gives 0.7175 and the second 0.9634, from the same balance sheet. You choose the formulation here, and every comparison you make should name it.

One more source of confusion: the SaaS quick ratio, which divides gained recurring revenue by lost recurring revenue, shares the name and nothing else. If that is what you need, it has its own calculator.

What is quick ratio (acid-test) calculator?

The quick ratio divides a company's quick assets by its total current liabilities. Quick assets are the current assets that are already cash or can become cash without first being sold as goods: unrestricted cash and cash equivalents, marketable securities and other short-term investments, and trade receivables after the allowance for doubtful accounts. Current liabilities are everything due within a year, including the portion of long-term debt that falls due in that year. A current asset, under FASB's Topic 210 and the equivalent IFRS rules, is one expected to be realised, sold or consumed within a year or within the operating cycle if that is longer, which is why inventory and prepaid expenses qualify as current yet still fail the quick test. The result is a pure number: 0.90 means 90 cents of quick assets per dollar of current liabilities.

How to use this calculator.

1. 01Pick the formulation first. Strict counts only cash, securities and receivables and suits anyone carrying the credit risk, such as a lender or a supplier; Inclusive keeps other current assets and is the one to use when you need to tie back to a published total-current-assets figure.
2. 02Enter cash and cash equivalents from the balance sheet, then check the notes and take out restricted cash, compensating balances and cash pledged as collateral. Enter marketable securities and short-term investments in their own field so the cash ratio can be shown separately.
3. 03Enter accounts receivable net of the allowance for doubtful accounts, not the gross figure, and enter inventory and prepaid expenses even though neither counts as quick. They are needed for total current assets and to show what was left out; a service business with no stock enters 0 for inventory.
4. 04Put every remaining current-asset line into Other current assets: contract assets, current tax assets, derivative assets, assets held for sale. This is the line on which the two formulations part company.
5. 05Enter total current liabilities, and make sure the current portion of long-term debt is in it. It sits on a separate line in many balance sheets and is easy to miss.
6. 06Read the ratio, then switch formulations. A large move tells you the answer depends on the definition as much as on the company's liquidity, so any covenant or peer comparison has to state which version it uses.

The formula.

Strict: QR = (C + S + AR) ÷ CL. Inclusive: QR = (CA − Inv − Prepaid) ÷ CL, where CA is total current assets, the sum of all six asset inputs. C is unrestricted cash and equivalents, S is marketable securities, AR is receivables net of the allowance, Inv is inventory, Prepaid is prepaid expenses and CL is total current liabilities.

Write CA out in full inside the inclusive version and everything cancels except C + S + AR + other current assets. The two formulations therefore differ by exactly other current assets ÷ CL, no more and no less. With nothing on that line they agree to the last digit; with a large line they can be a quarter of a turn apart.

Three further figures come from the same inputs. The cash ratio, (C + S) ÷ CL, drops receivables too and is the same in both modes. Assets excluded is CA minus whichever numerator you chose: inventory and prepaid expenses under Inclusive, those plus other current assets under Strict. The coverage shortfall is CL minus quick assets, the dollars missing before current liabilities would be covered in full, and it reads zero once the ratio reaches 1.0 rather than going negative. Current liabilities must be above zero, since a company with none has nothing to divide by.

The ratio rests on assumptions worth knowing before anyone relies on it. Receivables are counted at book value, so it trusts the allowance for doubtful accounts and assumes the rest will be collected on time. Securities are taken at their carrying amount, as if they could be sold without loss. And it compares a stock of liquid assets with a full year's liabilities without asking when within the year each bill falls due, or what cash the business will earn in the meantime. Those assumptions are weakest in a crisis, which is exactly when the ratio gets the most attention; the cash ratio is the version that relies on none of them.

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.