This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Quick Assets calculation: Cash plus Receivables plus Short-term Investments.
Quick Ratio: Quick Assets divided by Current Liabilities
Example: The Round Number CompanyCash = 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.
Another definition of Quick Assets is: Current Assets less Inventories. This definition includes Prepaid Expenses but they are not always quickly converted to Cash.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.