The Income|Outcome^® Contextuary

Quick Assets calculation: Cash plus Receivables plus Short-term Investments.

Quick Ratio: Quick Assets divided by Current Liabilities

Example: The Round Number Company Cash = 20; Receivables = 40; Short-term Investments = 6, Current Liabilities = 36 Quick Assets = 20 + 40 + 6 = 66 Quick Ratio = 66/36 = 1.8

Quick Assets include the Current Assets that can quickly (and easily) be converted to cash.

The Quick Ratio is a variant of the Current Ratio; it only includes items which are quickly (and easily) converted into cash.

“What do you mean by that?”

Another definition of Quick Assets is: Current Assets less Inventories. This definition includes Prepaid Expenses but they are not always quickly converted to Cash.