Financial Definition of QUICK ASSETS
What It Is
How It Works
For example, let's say that Company XYZ has $60,000 in cash, $40,000 in receivables, and $10,000 in marketable securities. We would say that Company XYZ has $110,000 in quick assets.
Why It Matters
Quick assets are a key part of the quick ratio, which is a measure of whether and how well a company can pay its short-term financial liabilities. The ratio is often called the acid-test ratio. The primary formula for quick ratio is:
(Cash + Marketable Securities + Accounts Receivable)/Current Liabilities
For example, here is some information about XYZ Company:
Using the primary quick ratio formula and the information above, we can calculate that XYZ Company’s quick ratio is:
($60,000 + $10,000 + $40,000)/$65,000 = 1.692
This means that for every dollar of XYZ Company’s current liabilities, XYZ Company had $1.69 of very liquid assets to pay those liabilities.
A common rule of thumb is that a quick ratio of 1-to-1 or greater means a company can pay its current liabilities.
Learn More about quick assets
Britannica English: Translation of quick assets for Arabic speakers
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