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The quick assets ratio provides a more conservative measure
than the working capital ratio in that it excludes stock
(inventory). A ratio greater than 1:1 (i.e. 2:1) indicates that
current liabilities can be met from current assets without
having to liquidate stock.
Ratios should be considered over a period of time (say three
years), in order to identify trends in the performance of the
business.
The calculation used to obtain the ratio is:
Quick Assets Ratio =
Current Assets - Stock
Current Liabilities
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