Quick Ratio
Definition
A stringent liquidity ratio (also called Acid-Test Ratio) that measures the ability to meet short-term obligations using only the most liquid assets, excluding inventories and prepaid expenses. Formula: (Current Assets − Stock − Prepaid Expenses) ÷ Current Liabilities. Ideal is 1:1.
Example
"If Quick Assets = ₹2 Lakhs and Current Liabilities = ₹2 Lakhs, Quick Ratio = 1:1, suggesting adequate immediate liquidity."