Current vs quick ratio
Definition · Level 9 · Valuation
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Current assets ÷ current liabilities, versus a stricter test that keeps only cash, short-term investments and receivables in the numerator (inventory excluded).
Example
CA 900, inventory 300, CL 600 → 1.5x vs 1.0x.
Where Tradecraft teaches it
Level 9 · Valuation, in the lesson “Balance-sheet health: leverage and liquidity”: Debt/equity, net debt, net debt/EBITDA, interest coverage, current and quick ratios.
Related terms
- Current ratioCurrent assets ÷ current liabilities: whether resources turning into cash within a year cover the bills due within a year.
- Debt/equityTotal debt ÷ shareholders’ book equity — a leverage gauge.
- Interest coverageEBIT ÷ interest expense: how many times operating profit covers the interest bill.
- Net debtTotal debt minus cash and equivalents. A negative figure means the company holds more cash than it owes (a “net cash” position).
- Net debt/EBITDALeverage in “turns”: borrowings less cash, divided by operating earnings before D&A.
- 10-K / 10-Q / 8-KSEC filings: the audited annual report, the unaudited quarterly report, and the current report for material events such as earnings releases, deals…