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quick ratio analyzes whether a company can pay off its short-term obligations using its most liquid assets. the ideal quick ratio for companies is 1.50. quick ratio is calculated as follows:

Quick ratio = Quick assets / Current liabilities
Quick assets = Current assets - Inventory

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quick ratio analyzes whether a company can pay off its short-term obligations using its most liquid assets. the ideal quick ratio for companies is 1.50. quick ratio is calculated as follows:

Quick ratio = Quick assets / Current liabilities
Quick assets = Current assets - Inventory

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Quick ratio means

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1. Quick assets ratio formula

Quick asset ratio = quick assets / current liabilities

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The recommended quick ratio may be 1 to 1 although care needs to be taken

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Quick ratio indicates company's liquidity and ability to meet its financial liabilities.

Formula of quick ratio = (Current assets - Inventory)/Current Liabilities

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