
Please register now to read all responses and to join this discussion yourself. It's easy and 100% free.


🔥NEW Alternate Formula of Quick Ratio? caligo, Student (MBA), India, Member

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

Please register now to read all responses and to join this discussion yourself. It's easy and 100% free.
Sign up for free Log in



Alternate Formula of Quick Ratio
Jaap de Jonge, Editor, Netherlands


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.




Special Interest Group Leader






