Similar to the Current Ratio, but excludes inventory (which may be harder to liquidate quickly). Formula: (Current Assets − Inventory) ÷ Current Liabilities. A ratio above 1.0 is typically considered healthy.
How to calculate it
A common quick ratio is (current assets − inventory − prepaids) ÷ current liabilities, though implementations vary. The goal is to focus on more liquid current assets.
With $160,000 current assets, $60,000 inventory, no prepaids, and $100,000 current liabilities, the ratio is 1.00.
Where this connects to Impresa
You may encounter this concept when reviewing Financial Health. Start with the underlying inputs and check the applicable reporting period before interpreting the result.
Read the Financial Health guideDefinitions here explain the concept. Accounting treatments, formulas, and industry comparisons may vary. Use your own records and qualified advice for material decisions.