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Quick Debt Ratio Calculator

Calculate the quick ratio to evaluate your ability to cover immediate liabilities.

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Calculation Parameters

Specify your inputs below.

Calculated Result

Quick Liquid Assets $60,000.00
Quick Debt Ratio (Acid-Test) 1.20
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Expert Tip

A quick ratio above 1.0 (Acid-Test) shows that a firm has enough liquid assets to pay its current liabilities immediately.

How this Calculator Works

This calculator computes the Quick Ratio (also known as the Acid-Test Ratio), measuring a company's ability to cover its short-term liabilities using only its most liquid assets. It excludes inventory from assets because inventory takes time to liquidate. Creditors use it to judge corporate liquidity.

Formula & Methodology

Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities - Cash & Marketable Securities includes cash, bank balances, and liquid short-term investments. - Accounts Receivable is the outstanding cash owed by customers. - Current Liabilities is the short-term debts due within one year.

Step-by-Step Calculation Example

Here is a step-by-step example showing how the calculations are performed:

A company has $50,000 in cash, $30,000 in accounts receivable, and $40,000 in current liabilities. 1. Sum liquid assets: $50,000 + $30,000 = $80,000. 2. Divide by current liabilities: $80,000 / $40,000 = 2.0. Result: The Quick Ratio is 2.0.

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Detailed Insights & Expert Guide

ℹ️ About this Calculation

This equity research and valuation calculator evaluates corporate fundamentals, stock price multiples, cost of capital, dividend discount models, and shareholder return metrics based on SEC financial reporting and Wall Street equity analysis standards.

Variable Glossary

Input

Equity Inputs

Share price, earnings per share (EPS), dividend amount, book value, debt/equity ratio, or systematic beta coefficient.

Parameter

Valuation Output

Price-to-Earnings (P/E), EV/EBITDA multiple, Intrinsic Value ($), WACC %, or Return on Equity (ROE %).

How to Calculate Step-by-Step

1

Step 1

Input current stock price, shares outstanding, or balance sheet / income statement numbers.

2

Step 2

Enter expected growth rate, cost of equity, or market risk premium assumptions.

3

Step 3

Review calculated valuation multiples, margin of safety comparison, or required rate of return.

FAQ

What is WACC and why is it crucial for equity valuation?
Weighted Average Cost of Capital (WACC) represents a company's required average return on debt and equity capital. It is used as the hurdle rate to discount future cash flows in DCF valuation models.
How does stock Beta measure systematic risk?
A stock beta of 1.0 means price volatility matches the broader market index. Beta > 1.0 indicates higher volatility, while Beta < 1.0 reflects lower systematic volatility.
Should valuation multiples be evaluated in isolation?
No. Valuation ratios (P/E, EV/EBITDA, P/B) should always be benchmarked against industry peer groups, historical trading averages, and expected earnings growth (PEG ratio).