Canonical formula calculator
QUICK RATIO
The stricter liquidity test — can you pay short-term bills without selling inventory? The number lenders actually care about.
Worked example
How the number is worked out
The same builder again — this time not counting the stock in the yard.
Starting from
Working
Take the timber out and the cushion disappears — 1.65× becomes exactly 1.00×. The gap between the two ratios is the share of safety that depends on selling stock in a hurry.
What this tells you
Quick ratio is the stricter cousin of current ratio. It measures whether you can cover short-term liabilities with cash, receivables, and other liquid assets — excluding inventory, because inventory cannot always be converted to cash quickly when you need it. Above 1.0 is healthy. Below 1.0 means without selling inventory you would have trouble meeting near-term obligations.
When to use it
Calculate quick ratio at month-end alongside current ratio. The gap between them tells you how much of your working capital is tied up in inventory. A current ratio of 2.0 and a quick ratio of 0.5 means most of your "liquidity" is actually inventory — which is fine for a retailer in season, and concerning for a SaaS business.
What it doesn’t tell you
Quick ratio still includes receivables, which can be slow to collect. For the strictest liquidity test, consider the cash ratio (cash only, divided by current liabilities). And like all balance-sheet ratios, this is a snapshot — your real liquidity depends on the timing of cash flows, not just the totals.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.