Cited sector bands, not opinion
Every industry band traces back to the Damodaran NYU Stern Working Capital Requirements dataset or a named textbook with page references. No 'based on observation' claims.
See source registryAcid-test liquidity ratio
Quick Ratio Calculator
Liquidity assessment in 5 inputs. Industry benchmarks cited to the Damodaran NYU Stern dataset (last update January 2026). No email capture.
12 sectors Free No login
Verified June 2026 against Corporate Finance Institute.
Inputs
All figures in $Damodaran band for this sector: 1.2 to 2.5
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$
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Worked-example presets
Acme SaaS Co. (illustrative example, not a real company). Numbers chosen to demonstrate the calculation on a software balance sheet.
Quick ratio (acid-test)
2.36
Healthy liquidity
Cash$12,000,000
+ Marketable securities$6,000,000
+ Accounts receivable$8,000,000
= Quick assets$26,000,000
/ Current liabilities$11,000,000
Sector band: 1.2 to 2.5 (Damodaran NYU Stern, Jan 2026)
Formula in use: Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities. Verified June 2026 against Corporate Finance Institute: quick ratio definition.
What is the quick ratio
The quick ratio (also called the acid-test ratio) divides a company's most-liquid current assets (cash, marketable securities, accounts receivable) by its current liabilities. A ratio of 1.0 means the company can cover every dollar of short-term debt without selling inventory. Healthy bands depend on industry: software firms commonly sit at 1.2 to 2.5, pharmaceuticals at 1.5 to 3.0, and grocery retailers at 0.2 to 0.6.
Verified June 2026. Source: Corporate Finance Institute. Formula triangulated with Subramanyam, Financial Statement Analysis, 11th Edition, pp. 499-505.
Sector benchmarks
Quick ratio expectations by industry
Industry bands triangulated from the Damodaran NYU Stern Working Capital Requirements dataset (US, last update January 2026) and Subramanyam Financial Statement Analysis (11th Edition).
| Industry | Expected quick ratio | Inventory / Sales | AR / Sales | Non-cash WC / Sales |
|---|---|---|---|---|
| Software (System and Application) | 1.2 to 2.5 | 0.46% | 16.84% | 10.05% |
| Computer Services | 1.0 to 2.0 | 8.12% | 21.30% | 13.40% |
| Retail (General) | 0.2 to 0.6 | 8.67% | 3.50% | -0.11% |
| Healthcare Products | 1.5 to 3.5 | 17.59% | 16.51% | 25.65% |
| Drugs (Pharmaceutical) | 1.5 to 3.0 | 15.61% | 21.80% | 32.09% |
| Construction Supplies | 1.0 to 2.0 | 20.95% | 14.83% | 22.56% |
| Auto and Truck | 0.7 to 1.2 | 9.91% | 6.30% | -2.96% |
| Restaurant and Dining | 0.3 to 0.8 | 2.17% | 5.32% | 2.79% |
| Hotel and Gaming | 0.4 to 1.0 | 2.62% | 10.36% | 0.77% |
| Telecom Services | 0.5 to 1.0 | 2.04% | 12.83% | -3.69% |
| Banks (Regional) | Not meaningful | 0.82% | 0.00% | 0.00% |
| Financial Services (Non-bank and Insurance) | Not meaningful | 0.36% | 1332.22% | 1186.00% |
Verified June 2026. Source: Damodaran NYU Stern, Working Capital Requirements by Industry Sector. US companies, last update January 2026.
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About this siteFrequently asked questions
What is a good quick ratio?
A quick ratio at or above 1.0 is generally considered healthy because it means a company can cover all current liabilities from cash, marketable securities, and receivables without selling inventory. Acceptable levels vary by industry: software firms typically sit between 1.2 and 2.5, while grocery retailers can operate safely between 0.2 and 0.6 because their inventory turns rapidly and sales are in cash.
How is the quick ratio different from the current ratio?
The quick ratio excludes inventory and prepaid expenses from the numerator, focusing only on assets that can be converted to cash within roughly 90 days. The current ratio includes all current assets. For inventory-heavy industries the current ratio can mask liquidity stress that the quick ratio reveals. Both ratios are usually read alongside the cash conversion cycle.
Is the quick ratio the same as the acid-test ratio?
Yes. Acid-test ratio and quick ratio are interchangeable names for the same calculation: (Cash + Marketable Securities + Accounts Receivable) divided by Current Liabilities. The term acid-test comes from the 19th-century assayer's test for gold purity.
Can a quick ratio be too high?
Yes. A very high quick ratio (above 3.0 for most non-pharma industries) can signal that the company is holding excess cash or receivables instead of reinvesting in growth, paying down debt, or returning capital to shareholders. Equity analysts often flag persistently high quick ratios as evidence of capital allocation drift.
Does the quick ratio apply to banks?
No. Banks and insurance companies are regulated on capital and liquidity coverage frameworks (CET1, Liquidity Coverage Ratio, Net Stable Funding Ratio) rather than balance-sheet ratios designed for industrial firms. The Damodaran dataset confirms financial-sector working capital is structurally different and the quick ratio is not a meaningful indicator.