Quick Ratio
The Quick Ratio measures the availability of assets that can quickly be converted into cash to cover current liabilities. Inventory and other less liquid current assets are excluded from this calculation. The Quick Ratio is a measure of the ability to pay short-term creditors immediately from liquid assets. A quick ratio of 1:1 or more is considered ‘safe’. For this period, the quick ratio was 0.41:1, up from 0.38:1 last period and below the minimum target of 1:1.
The Quick Ratio is less than the alert level of 0.5:1. A result less than 1.0 indicates that the business is dependent on less current assets (ie inventory or assets) to liquidate short-term obligations.