Alternate Formula of Quick Ratio?

Quick Ratio
Knowledge Center

Quick Ratio > Forum

New Topic

Student (MBA), India
🔥NEW Which formula is right: 1. The formulae given in the knowledge center or: 2. Quick Ratio = Current Assets -(Stock+Prepaid Expenses) / Current Liabilities. (...) Read more? Sign up for free

  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.

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.. 👍🏻.


More on Quick Ratio
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

Are you interested in Quick Ratio? Sign up for free

Notify your students

Copy this into your study materials:

and add a hyperlink to:

Link to this discussion

Copy this HTML code to your web site:

Quick Ratio
Knowledge Center


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.7 - Last updated: 18-1-2021. All names of their owners.