Alternate Formula of Quick Ratio?

Dictionary
FAQ
Zoom
More
App Ask a question about management Reviews
Log in
      
			              Forum
			            
			            	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.
				      
X

							  			Welcome to the Quick Ratio forum. The topic being discussed here is: "Alternate Formula of Quick Ratio?". 
										
Will you join us? It's free. 

										Log in

						            	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.. 👍🏻.
				                
Leave a comment?

			                            More on Quick Ratio:
			                          
													            	Summary
													            
												              Forum
												            
		                          	Quick Ratio over Time
Quick Ration in Banking
Higher Quick Ratio is not Always Good
Why ACID Test Ratio?
👀Alternate Formula of Quick Ratio?

		                              Special Interest Group
		                            
		                            Do you have a keen interest in Quick Ratio? Become our SIG Leader
Quick Ratio
Knowledge Center