Quick ratio
The current ratio without inventory: what the company would pay with if the warehouse could not be sold.
Formula
\frac{\text{Current assets} - \text{Inventory}}{\text{Current liabilities}}Inventory is subtracted from current assets, leaving cash, short-term investments and receivables.
How to read the number
The gap between the current and the quick ratio shows how much of the cushion rests on stock. The wider it is, the more solvency depends on selling that stock.
When the metric lies
Receivables count as a quick asset, but they still have to be collected: for a company with one large customer they turn into cash exactly when that customer decides to pay.
Where it is used
The metric is calculated across every security in the catalogue and appears on the instrument card, in the multiples table and in the screener.
Also known as: quick ratio, acid-test ratio