Wize University Introduction to Financial Accounting Textbook > Financial Statement Analysis
Quick Ratio (Acid Test Ratio)
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Quick Ratio (Acid Test Ratio)
The quick rate is a liquidity ratio that measures the company's ability to pay its short-term obligations using only its most liquid assets.
About the Quick Ratio
- Considers only Quick Assets
- Cash and cash equivalents
- Short-term investments
- Accounts receivable
- A ratio above 1 means that the company has adequate liquidity.
- A ratio below 1 means that the company may potentially have liquidity issues.
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Example: Quick Ratio (Acid Test Ratio)
Calculate the quick ratio for Nike, Inc. for the years 2019 and 2020, comment on the results.
Practice: Quick Ratio (Acid Test Ratio)
Compute Microsoft, Inc.'s quick ratio (acid test ratio) for the year 2019 and 2018.
Round your final answer to 2 decimal places and enter your answer in decimal format.
