# Quick Ratio

*Accounting & Reporting — Finicade finance glossary*

The quick ratio is the current ratio with inventory stripped out, on the view that stock is the current asset least likely to convert to cash quickly. It's the sharper liquidity test for retailers and manufacturers, where inventory dominates the balance sheet. A company with a healthy current ratio and a poor quick ratio is one whose solvency depends on selling what it's holding.

**Formula:** `Quick ratio = (Current assets − Inventory) ÷ Current liabilities`

**Also known as:** acid test ratio, acid-test

**Related terms:** [Current Ratio](https://finicade.com/glossary/current-ratio), [Liquidity](https://finicade.com/glossary/liquidity), [Inventory](https://finicade.com/glossary/inventory), [Working Capital](https://finicade.com/glossary/working-capital), [Financial Ratios](https://finicade.com/glossary/financial-ratios)

Source: https://finicade.com/glossary/quick-ratio