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In finance, the quick ratio, also known as the acid-test ratio, is a liquidity ratio that measures the ability of a company to use near-cash assets (or 'quick' assets) to extinguish or retire current liabilities immediately. It is the ratio between quick assets and current liabilities. A normal liquid ratio is considered to be 1:1.
The quick ratio is calculated by deducting inventories and prepayments from current assets and then dividing by current liabilities, giving a measure of the ability to meet current liabilities from assets that can be readily sold. A better way for a trading corporation to meet liabilities is from cash flows, rather than through asset sales, so;
The formula is the following: LR = liquid assets / short-term liabilities Liquidity ratios measure how quickly assets can be turned into cash in order to pay the company's short-term obligations. Following ratios can be considered to measure the liquidity of a firm. Working Capital; Working Capital Ratio; Current Ratio; Quick Ratio; Absolute ...
The formula is: Current ratio: Current assets / Current liabilities ... Current ratio vs. quick ratio vs. debt-to-equity. Other measures of liquidity and solvency that are similar to the current ...
The quick ratio, or acid-test ratio, measures the ability of a company to use its near-cash or quick assets to extinguish or retire its current liabilities immediately. Quick assets are those that can be quickly turned into cash if necessary and may not be used for a substantial period of time such as twelve months.
Retention Ratio Formula. The retention ratio is calculated as: Retention Ratio = (Net Income – Dividends Paid) ÷ Net Income. This equation reveals the portion of net income that remains within ...
The current ratio is an indication of a firm's accounting liquidity. Acceptable current ratios vary across industries. [1] Generally, high current ratio are regarded as better than low current ratios, as an indication of whether a company can pay a creditor back. However, if a company's current ratio is too high, it may indicate that the ...
Police in Thailand have detained the British husband of Lamduan Armitage, the Thai woman whose body was found in the Yorkshire Dales more than 20 years ago. Walkers discovered her half-naked body ...