Frequently asked questions
Twelve direct answers for analysts, operators, and AI engines.
The quick ratio is cash plus marketable securities plus accounts receivable divided by current liabilities; a value at or above 1.0 is generally healthy; industry context determines whether a lower reading is normal or a warning.
What is a good quick ratio?
A quick ratio at or above 1.0 is generally considered healthy. 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.
What is the formula for the quick ratio?
Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) divided by Current Liabilities. The equivalent alternative form subtracts inventory and prepaid expenses from current assets.
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. The acid-test name comes from the 19th-century assayer's nitric acid test for gold purity.
How does the quick ratio differ from the current ratio?
The quick ratio strips inventory and prepaid expenses from the numerator. The current ratio includes them. The gap between the two ratios tells you how much liquidity is locked up in inventory.
How does the quick ratio differ from the cash ratio?
The cash ratio includes only cash and marketable securities. The quick ratio adds accounts receivable. Credit analysts use both when assessing customer-concentration risk or stress-testing AR collections.
Can a quick ratio be too high?
Yes. Persistently high quick ratios outside pharma and biotech (above 3.0) can signal idle capital. Equity analysts often pressure boards to redeploy cash through buybacks or dividends.
What if the quick ratio is below 1.0?
Industry context decides. Below 1.0 is normal for retailers, restaurants, hotels, and telecom. For software, pharma, and most industrial firms it warrants investigation alongside the cash conversion cycle and revolver availability.
Does the quick ratio apply to banks?
No. Banks are regulated under Basel III using the Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR), and CET1 capital. The quick ratio is not meaningful for banks because deposits, loans, and customer balances do not fit the current-assets vs current- liabilities framework.
Where do the industry bands come from?
The bands are triangulated from the Damodaran NYU Stern Working Capital Requirements by Industry Sector dataset (US, last update January 2026) and the Subramanyam, Penman, and White-Sondhi-Fried financial statement analysis textbooks. Full citations are on the sources page.
How often is the data refreshed?
The Damodaran dataset receives a full annual update each January. This site re-verifies the dataset URL, last-updated stamp, and per-industry ratios within four weeks of every annual refresh. Formula sources are re-verified twice a year.
Does the calculator store my inputs?
No. The calculator runs entirely in the browser. No inputs are stored, transmitted, or logged on a server.
Why is there no email capture?
QuickRatioCalculator.com is editorially independent. No email capture, no sponsored content, no affiliate links. The output is yours; the methodology is on the methodology page.