Quick Ratio
द्रुत अनुपात
Also called Acid Test Ratio, Liquid Ratio
Formula
Quick ratio = (Current assets − Inventory − Prepaid expenses) / Current liabilities
- Numerator
- Quick assets (current assets less inventory and prepaid expenses)
- Denominator
- Current liabilities
The quick ratio compares quick (liquid) assets with current liabilities, excluding inventory and prepaid expenses.
What the value tells you
At or above 1:1 the firm can meet current liabilities without selling stock; well below 1 indicates dependence on inventory.
Explained
The quick ratio, also called the acid test or liquid ratio, is a stricter test of short-term solvency than the current ratio. It recognises that inventory may take time to sell and prepaid expenses cannot be used to pay creditors.
Quick assets = Current assets − Inventory − Prepaid expenses. They mainly include cash, bank balances, marketable securities and receivables. Some textbooks also exclude bank overdraft from current liabilities to compute the 'liquid liabilities', so candidates should follow the definition given in the question.
The conventional benchmark is 1:1, meaning liquid assets are enough to pay all current liabilities immediately. A business with a current ratio of 2:1 but a quick ratio well below 1 depends heavily on selling inventory to meet its obligations. Lenders look at both ratios together when appraising working capital facilities.
Example
Current assets Rs 50 lakh including inventory Rs 20 lakh and prepaid Rs 2 lakh; current liabilities Rs 25 lakh. Quick ratio = (50 − 20 − 2) / 25 = 1.12:1.
मौज्दात र अग्रिम भुक्तानी खर्च बाहेकका तरल सम्पत्तिलाई चालु दायित्वसँग तुलना गर्ने अनुपात द्रुत अनुपात हो।
अनुपातले के देखाउँछ
१:१ वा माथि भए मौज्दात नबेची चालु दायित्व तिर्न सकिन्छ; धेरै कम भए मौज्दातमा निर्भरता देखाउँछ।
व्याख्या
द्रुत अनुपात (एसिड टेस्ट वा तरल अनुपात) चालु अनुपातभन्दा कडा परीक्षण हो, किनकि मौज्दात बिक्री गर्न समय लाग्छ र अग्रिम खर्चले साहुलाई भुक्तानी गर्न सकिँदैन।
तरल सम्पत्ति = चालु सम्पत्ति − मौज्दात − अग्रिम भुक्तानी खर्च। केही पाठ्यपुस्तकमा तरल दायित्व निकाल्दा बैंक अधिविकर्ष पनि घटाइन्छ, त्यसैले प्रश्नमा दिइएको परिभाषा पालना गर्नुहोस्। आदर्श अनुपात १:१ मानिन्छ।
उदाहरण
चालु सम्पत्ति रु ५० लाख (मौज्दात रु २० लाख, अग्रिम खर्च रु २ लाख सहित) र चालु दायित्व रु २५ लाख भए द्रुत अनुपात = (५० − २० − २) / २५ = १.१२:१।
Related
Sources
- Wikipedia: Quick ratioArticle
In the syllabus: ADBL L4 2
Updated