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Quick Ratio

What is Quick Ratio?

The Quick Ratio, also known as the Acid Test Ratio, is a financial ratio that measures a company’s liquidity. It is the ratio of a company’s rapidly liquid assets, such as cash, short-term investments, and accounts receivable, to short-term liabilities, such as accounts payable and taxes. The Quick Ratio measures a company’s ability to meet its short-term liabilities using its most liquid assets. A higher Quick Ratio indicates that a company is better able to meet its liabilities and less dependent on obtaining new loans or financing. The Quick Ratio is used by lenders, investors and analysts to assess a company’s liquidity and financial health.

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