What is Quick Ratio?
The Quick Ratio is a stricter version of the Current Ratio that excludes inventory — because inventory can be slow or impossible to convert to cash. A quick ratio above 1.0 means a company could cover near-term liabilities without selling any inventory.
Formula
Quick Ratio = (Current Assets − Inventory) ÷ Current Liabilities
How TopTier Strategy uses Quick Ratio
Quick ratio sharpens the Financial Health read for inventory-heavy businesses where the current ratio can be misleading.
Related Glossary Terms
Other concepts in the Financial Health pillar.
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