logo

Alternate Formula of Quick Ratio?

Knowledge Center

Quick Ratio
Knowledge Center

Translatemore

Forum
3
caligo
Student (MBA), India

Alternate Formula of Quick Ratio?

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

Rating

 
1
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.

 
0
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.. 👍🏻.

 

More on Quick Ratio:
Summary
Discussion Topics
topic Quick Ratio over Time
topic Quick Ration in Banking
topic Higher Quick Ratio is not Always Good
topic Why ACID Test Ratio?
👀Alternate Formula of Quick Ratio?
Special Interest Group

SIG Leader

Do you know a lot about Quick Ratio? Become our SIG Leader



top

More on Quick Ratio:
Summary
Discussion Topics
topic Quick Ratio over Time
topic Quick Ration in Banking
topic Higher Quick Ratio is not Always Good
topic Why ACID Test Ratio?
👀Alternate Formula of Quick Ratio?
Special Interest Group

SIG Leader

Do you know a lot about Quick Ratio? Become our SIG Leader

Knowledge Center

Quick Ratio
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2023 12manage - The Executive Fast Track. V16.3 - Last updated: 2-10-2023. All names of their owners.




12manage is looking for BA/MBA students. More info.