Definition of Quick Ratio
Example of Quick Ratio
If a company's cash and cash equivalents + marketable securities + accounts receivable adds up to $1,000,000 and the amount of the company's current liabilities is $1,200,000, its quick ratio is 0.83 to 1 ($1,000,000/$1,200,000 = 0.83).
The quick ratio differs from the current ratio in that some current assets are excluded from the quick ratio. The most significant current asset that is excluded is inventory. The reason is that inventory might not be "quick" to turn to cash.