Quick ratio calculator: the acid-test ratio for your business
Edited by Moe Ameen · Published
The quick ratio, also called the acid-test ratio, divides your most liquid assets by current liabilities. Quick assets are cash, cash equivalents, marketable securities and net accounts receivable, which works out the same as current assets minus inventory and prepaid expenses. $100,000 of quick assets against $120,000 of current liabilities gives 0.83. Investopedia calls 1 or higher ideal, and the SBA's ratios guide calls 0.5 to 1 typically satisfactory.
Key takeaways
- Quick ratio = (cash + cash equivalents + marketable securities + net receivables) ÷ current liabilities.
- Inventory and prepaid expenses are left out because you can't count on turning them into cash quickly.
- Investopedia's bar is 1 or higher. The SBA's ratios guide accepts 0.5 to 1 if customers pay on time.
- The SBA's guide subtracts inventory only, so its version comes out a little higher.
- It's stricter than the current ratio, so a business can pass one test and fail the other.
How do you calculate the quick ratio?
Add cash, cash equivalents, marketable securities and net receivables, then divide by current liabilities. $100,000 over $120,000 is 0.83.
Investopedia and CFI give two ways to get quick assets [1][2]. You can add up the liquid ones: cash, cash equivalents, marketable securities and net accounts receivable. Or start from total current assets and subtract inventory and prepaid expenses. Either way, divide by all of your current liabilities [1]. Net receivables means the amount you expect to collect, after taking out what probably won't be paid [1].
| Method | Quick assets | Quick ratio |
|---|---|---|
| Add up: $40,000 cash + $0 securities + $60,000 receivables | $100,000 | 100,000 ÷ 120,000 = 0.83 |
| Subtract: $180,000 current assets − $70,000 inventory − $10,000 prepaid | $100,000 | 100,000 ÷ 120,000 = 0.83 |
| SBA guide: $180,000 current assets − $70,000 inventory | $110,000 | 110,000 ÷ 120,000 = 0.92 |
The SBA's ratios guide uses (current assets − inventory) ÷ current liabilities [3], which keeps prepaid expenses in. That's why its version reads 0.92 here instead of 0.83. If a lender quotes you a quick ratio, ask which formula it used.
Why does the quick ratio leave out inventory?
Inventory can be hard to sell fast without deep discounts, and prepaid expenses may not be refundable, so neither is counted.
Investopedia gives two reasons. Inventory may be hard to turn into cash quickly without big markdowns, and prepaid expenses can't be used to pay a bill and may not be refunded [1]. CFI says converting inventory could take too long to cover pressing liabilities [2]. A few businesses do sell inventory fast enough to treat it as a quick asset, Investopedia notes, but most don't [1].
What is a good quick ratio?
Investopedia calls 1 or higher ideal. The SBA's ratios guide calls 0.5 to 1 typically satisfactory if receivables are collected on time.
Below 1, Investopedia says, a company may not be able to pay off all its current liabilities in the short term [1]. The SBA's guide is more forgiving: it calls 0.5 to 1 typically satisfactory, as long as the company collects its receivables on time [3]. Both say it depends on the industry [1][3].
| Industry | Benchmark |
|---|---|
| Gasoline stations | 5.6 to 6.0 |
| Housing contractors | 1.1 to 1.3 |
Other published examples: CFI's sample company has $55 million of quick assets against $10 million of liabilities, a ratio of 5.5 [2]. Investopedia compares two companies at 0.45 and 1.04 and says the one below 1 may not be able to pay its current obligations from quick assets alone [1].
Do lenders look at the quick ratio?
CFI says lenders care whether a business has the cash to cover short-term bills. SBA rules name the current ratio, not the quick ratio.
CFI says investors, suppliers and lenders are more interested in whether a business has enough cash on hand for its short-term liabilities [2]. For standard 7(a) loans over $350,000, the SBA's SOP 50 10 8.1 lists the current ratio, debt to tangible net worth and debt service coverage, plus any other ratio the lender considers significant for the business or industry [5]. The quick ratio isn't on that named list, so whether it comes up depends on the lender. Work out your current ratio too, and see what lenders check for the documents behind these numbers.
What are the limits of the quick ratio?
It ignores future cash flow and long-term debt. It can also overstate how much of your receivables you'll really collect.
Investopedia lists the downsides: the ratio says nothing about future cash flow, leaves out long-term liabilities, and may overstate both receivables and how easily securities sell in a downturn [1]. A business with cash today can still run short if it isn't selling at a profit. That's why lenders also look at income against loan payments, the DSCR, and at gross margin.
Glisten tool
Quick ratio calculator
Glisten tool · Quick ratio calculator
— quick ratio
Enter at least one quick asset.
Count only receivables you expect to collect. Lenders read the balance sheet their own way, so treat this as an estimate. It runs in your browser, and nothing you type is sent anywhere or saved.
We checked the calculator against the examples on this page. Both methods give 0.83 for the sample balance sheet, the SBA's inventory-only version gives 0.92, and CFI's $55 million ÷ $10 million gives 5.50 [2]. In the current-assets mode it also shows your current ratio (1.50 for the sample).
Is this right for you?
Best for
- Seeing whether your cash and receivables alone could cover the bills due this year.
- Businesses that carry a lot of inventory, where the current ratio can look better than the cash position.
Not ideal for
- Judging whether income covers loan payments. The DSCR calculator does that.
- Matching a lender's number exactly. Lenders differ on which formula they use and how they value receivables.
Frequently asked questions
Is the quick ratio the same as the acid-test ratio?
Yes. They're two names for the same ratio [1].
What does a quick ratio of 1.5 mean?
The business has $1.50 of liquid assets for every $1 of current liabilities [1].
What's the difference between the quick ratio and the current ratio?
The current ratio counts all current assets, including inventory and prepaid expenses. The quick ratio leaves them out, so it's the more conservative of the two [1].
Should I include all my accounts receivable?
No. Take out the amount you don't expect to collect. Investopedia says the ratio should reflect only cash that could really be on hand [1].
Is the calculator private?
Yes. It runs in your browser, and nothing you type is sent anywhere or saved.
How we know this
On November 2, 2026 we read Investopedia's and CFI's quick ratio pages, the SBA's financial ratios learning guide, the Alaska SBDC's ratio list and the credit analysis section of the SBA's SOP 50 10 8.1 (effective October 1, 2026). The worked examples are our own arithmetic, and the calculator reproduces them.
- Understanding the quick ratio: formula, examples, pros and cons, Investopedia. Checked November 2, 2026.
- Quick ratio: overview, formula, example, template, Corporate Finance Institute. Checked November 2, 2026.
- Your business financial strategy: calculate and analyze your financial ratios, SBA (Ascent). Checked November 2, 2026.
- The top 10 financial ratios for business owners, Alaska Small Business Development Center. Checked November 2, 2026.
- SOP 50 10 8.1 technical policy updates (effective October 1, 2026), SBA. Checked November 2, 2026.