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delarrio
Feb 26, 2008, 09:35 PM
What is the formula for quick ratio?

SeanF138
Feb 26, 2008, 09:37 PM
Quick Ratio= (Current Assets-Inventories)/Current Liabilities

morgaine300
Feb 27, 2008, 05:51 PM
Not correct.

Quick assets are cash, marketable securities & accounts receivables. There could be any number of current assets besides inventory that are not included in this equation. If subtracting out inventory works, then it's just a coincidence. Even for beginning level problems, they'll many times have at least some prepaid expenses that aren't included.

Best to just follow the rule of what is included and not worry about what isn't. So that's cash, marketable securities and A/R.

MaggieMouse
Feb 29, 2008, 08:31 AM
Here is the link Quick Ratio (http://www.valuebasedmanagement.net/methods_quick_ratio.html)