Quick Ratio Formula:
|Formula for Quick Ratio|
Quick Ratio is the second important liquidity ratio that measures the organisation’s ability to meet immediate obligations on a much stringent method. Here inventories which are slower to realise or convert into cash are eliminated from the current assets.
|Example-Calculation of Quick Ratio of NMDC Ltd.|
The minimum required number for safety is 1. Below one means inadequate safety and any number more than one indicates increased margin of safety.