GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Quick Liquidity Ratio


Synonyms:fast liquidity ratio, quick redemption ratio
Filed Under: financial-banking, investments
Tags: banking, investment
 

Definition of quick liquidity ratio

quick liquidity ratio
1. A ratio used to determine if a company has the short-term liquidity to make its financial obligations by selling its most liquid assets. Similar to the "current ratio", the quick liquidity ratio excludes inventory from the entity's assets. The quick liquidity ratio is calculated by subtracting the value of company's inventories from its assets and dividing that figure by the company's current liabilities. Also known as "quick assets ratio" or just "quick ratio."

Related Terms and Acronyms:

  • cash collateral   The proceeds of cash collected from the sale of liquid assets while in bankruptcy.
  • current ratio   A method of determining an entity's liquidity and its ability to cover its current liabilities.
  • liquid assets   Cash and other property that can be converted quickly and easily into cash.
  • liquidity   The ability to convert assets to cash quickly, without significant losses.
  • quick assets (QA)   Assets that can be liquefied quickly without a loss.
  • ratio   Comparison of two figures used to evaluate business performance, such as debt/equity ratio and return on investment.
  • short-term liabilities   Money that you have to pay in less than 12 months, including wages, short-term loans, taxes, credit card balances and long-term loans.

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