In accounting, the acid-test ratio, or quick ratio, is one way to measure a company's liquidity, or how well equipped it is to p
ay off debts in cash.
The quick ratio, Q, is calculated using the formula Q =
where C is is the value of the company's current assets, I is inventory, P is prepaid expenses, and L is current liabilities.
The quick ratio, Q, is calculated using the formula Q =
where C is is the value of the company's current assets, I is inventory, P is prepaid expenses, and L is current liabilities.
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