Quick Ratio Template

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Quick Ratio Template

This quick ratio template helps you calculate the quick ratio given the amount of cash, marketable securities, accounts receivable, and accounts payable.

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Quick Ratio Template Screenshot

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The Quick Ratio, also known as the Acid-test or liquidity ratio, measures the ability of a business to pay its short-term liabilities by having assets that are readily convertible into cash. These assets are, namely, cash, marketable securities, and accounts receivable. These assets are known as “quick” assets since they can quickly be converted into cash.

The Quick Ratio Formula

Quick Ratio = (Cash & equivalents + marketable securities + accounts receivable) / Current liabilities

Or, alternatively,

Quick Ratio = (Current Assets – Inventory – Prepaid expenses) / Current Liabilities

Generally speaking, the ratio includes all current assets, except:

  • Prepaid expenses – because they can not be used to pay other liabilities
  • Inventory – because it may take too long to convert inventory to cash to cover pressing liabilities

As you can see, the ratio is clearly designed to assess companies where short-term liquidity is an important factor, and hence it is commonly referred to as the Acid Test.

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Analyst Certification FMVA® Program

Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.

 

Financial Analyst certification curriculum

 

A well rounded financial analyst possesses all of the above skills!

 

Additional Questions & Answers

CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.

In order to become a great financial analyst, here are some more questions and answers for you to discover:

 

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