First Class Quick Ratio Analysis Example

For example lets assume a company has.

Quick ratio analysis example. In the example above the quick ratio of 119 shows that GHI Company has enough current assets to cover its current liabilities. Quick Ratio Example. Quick Assets are the ones that can be converted to cash in the short term or in a.

Quick Ratio also known as Acid Test or Liquid Ratio is a more rigorous test of liquidity than the current ratio. Quick Ratio Cash Marketable Securities Trade A ccounts Receivable Current Liabilities. The quick ratio number is a ratio between assets and liabilities.

For instance a quick ratio of 15 indicates that a company has 150 of liquid assets available to cover each 1 of its current liabilities. Quick Ratio Cash equivalents marketable securities accounts receivable Current liabilities. The following are the illustration through which calculation and interpretation of the quick ratio provided.

It is similar to the current ratio but is considered a more reliable indicator of a companys short-term financial strength. Quick Ratio Analysis Definition The quick ratio defined also as the acid test ratio reveals a companys ability to meet short-term operating needs by using its liquid assets. Quick ratio shows the extent of cash and other current assets that are readily convertible into cash in comparison to the short term obligations of an organization.

Analysis of Quick Ratio. The following is a quick ratio analysis benchmark example. Roxanne runs a successful eCommerce business selling her own line of clothing online.

For instance a quick ratio of 1 means that for every 1 of liabilities you have you have an equal 1 in assets. Suzy who works in a trade which she is truly passionate. Value of the quick ratio will provide a clearer indication of the companys success in this area.