Quick Ratio Calculator
Calculate your company's Quick Ratio in seconds with MoneyHub's trusted calculator
Updated 2 August 2026
Quick Ratio in a Nutshell
- The quick ratio indicates how effectively a company can meet its current liabilities.
- The formula is simple: Quick ratio = (Current assets - Current inventory) / Current liabilities
- A 1.50 : 1 quick ratio, also know as 1.5, means that a company has $1.50 of (liquid) current assets to cover ever $1 of its current liabilities.
Quick Ratio Calculator Instructions:
- You'll need your latest set of financials, or you can access your current assets total, inventory total and current liabilities total figures from your online accounting software (i.e. XERO or MYOB).
- Make sure you use the totals, not sub-totals.
Quick Ratio Calculator
Also known as the acid test, the quick ratio measures whether a business can cover its short-term debts using only its most liquid assets, excluding inventory. It's a stricter liquidity test than the current ratio.
Quick ratio
1.33
($240,000 − $80,000) ÷ $120,000
Quick assets
$160,000
Current assets minus inventory
Risk
Tight
Healthy
Surplus
0
0.5
1.0
2.0
2.5+
Healthy quick ratio
A quick ratio of 1.33 means you have $1.33 of liquid assets for every $1 of short-term debt, excluding inventory. This is the standard target for most NZ businesses and signals you can cover short-term obligations even if inventory turns over slowly. Compare with your Current Ratio for the broader liquidity picture.
Quick ratio vs current ratio: Both measure short-term liquidity, but the quick ratio is stricter because it excludes inventory. A retail business with lots of slow-moving stock might show a healthy current ratio (2.0+) but a much weaker quick ratio (under 1.0), revealing that the inventory is propping up the headline number. Lenders and investors look at both. The quick ratio is especially relevant for hospitality, retail, and manufacturing businesses where inventory can be hard to liquidate quickly.
Understanding the Quick Ratio
- Current assets used in the quick ratio include cash, accounts receivable and cash-based investments but exclude inventory.
- Current liabilities used in the quick ratio include all short-term debt (overdrafts, short-term loans), accounts payable, accrued liabilities (and other provisions) and other immediate debts
- To calculate the quick ratio in seconds, you can subtract inventory and current prepaid assets from current assets, and divide that difference by current liabilities. For example, if the inventory was $50,000, current prepaid assets were $10,000, current assets were $120,000 and current liabilities were $40,000, the quick ratio would be $120,000 - ($50,000 + $10,000) / $40,000, which equals 1.50:1.
How to Improve Your Quick Ratio
- Increase the time it takes to turnover inventory - the faster you sell stock, the higher your bank balance and therefore, the quick ratio will increase.
- Selling off unproductive assets - if the company has income-producing assets that aren't efficient or have stopped producing returns, it's better to sell them and use the cash in working capital.
- Get debtors to pay faster - our debtor guide details how to do this which improves bad debt collections and cash flow.
- Pay current liabilities - the less money you owe, the better the quick ratio. The more debt you can clear as it falls due, the better your business's financial position.
- Decrease drawings - these payments from the business always lower the amount of available cash. By reducing the amounts, there is more money to meet liabilities and increase the quick ratio.
