Quick ratio
Current assets excluding inventory, divided by current liabilities. A stricter near-term liquidity measure for businesses where inventory may be hard to monetize quickly.
Quick ratio = (Current assets − Inventory) / Current liabilitiesThe quick ratio is the stricter cousin of the current ratio: it excludes inventory from current assets, on the basis that inventory may not be readily convertible to cash at carrying value, particularly under stress. The construct is most informative for businesses with high inventory intensity — apparel retailers, durable-goods manufacturers, building-products distributors — where seasonal or fashion-cycle inventory write-downs are a recurring risk and headline current ratios overstate true near-term liquidity. A quick ratio above 1.0 is comfortable; below 0.5 is tight. For asset-light service businesses with negligible inventory, the quick ratio collapses into a number close to the current ratio and adds little information.