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What is Quick Assets Ratio?
At First, The Quick Assets Ratio often referred to as: Acid test or Liquid Ratio. We call it Quick Assets Ratio from now on.
The Quick Assets Ratio measures the ability of a company to use its quick assets to payoff its Current Liabilities immediately. A company with a Quick Assets Ratio lower then 1 cannot currently payoff its Current Liabilities.
How to calculate the Quick Assets Ratio?
Quick Assets Ratio = ( Cash & Equivalents + Total Receivables ) / Total Current Liabilities