Alternate Formula of Quick Ratio?

Quick Ratio
Knowledge Center

Forum

New Topic

caligo
Student (MBA), India

Alternate Formula of Quick Ratio?

🔥NEW Which formula is right:
1. The formulae given in the knowledge center
or:
2. Quick Ratio = Current Assets -(Stock+Prepaid Expenses) / Current Liabilities.

  Jaap de Jonge
Editor, Netherlands
 

Alternate Formula of Quick Ratio

In my opinion your formula is wrong. In the quick ratio we are interested in liquidity, so that is why we divide all assets which are quickly convertible into cash (= current assets) by the current liabilities. So current assets / current liabilities.
I don't see why you would want to subtract the stock and add prepaid expenses from/to the current assets.

  caligo
Student (MBA), India
 

Alternative Formula of Quick Ratio

@Jaap de Jonge: thank you sir for solving my confusion, I am very grateful for your answer.. 👍🏻.

Start a new forum topic

 

More on Quick Ratio:
Summary
Special Interest Group

Do you have a keen interest in Quick Ratio? Become our SIG Leader

Quick Ratio
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.8 - Last updated: 25-9-2021. All names of their owners.