Learn the art of finance engineering →
← Glossary

Definition · liquidity

Quick ratio (acid-test ratio)

Quick ratio compares liquid current assets with current liabilities, excluding inventory to give a stricter view of near-term liquidity. For quick ratio (acid-test ratio), the useful boundary is the source cash view, timing horizon, owner, liquidity exposure, and operating decision before payment timing, runway, or financing options change.

Also known as acid-test ratio, acid test ratio

Written by Pluvo TeamReviewed by Pluvo Team
02

Why it matters

Understanding quick ratio (acid-test ratio) matters because cash decisions are time-sensitive. Teams need to know when money moves, which balance changes, who owns the next action, and what can still be changed before liquidity tightens. Pluvo computes the quick ratio from live balance-sheet data, excluding inventory, and explains a shift by the liquid assets and current liabilities that moved.

03

In practice

  • Liquidity example

    Finance teams use quick ratio (acid-test ratio) when they need to understand cash timing before a decision is made. A team might compare expected receipts, payroll, vendor payments, and debt obligations to decide what action is needed this week.

  • Pluvo example

    Pluvo computes the quick ratio from live balance-sheet data, excluding inventory, and explains a shift by the liquid assets and current liabilities that moved.

In practice, teams should define quick ratio (acid-test ratio) with a clear source, owner, time period, and decision before they use it in reporting, planning, or operating reviews.

Understanding quick ratio (acid-test ratio) matters because cash decisions are time-sensitive. Teams need to know when money moves, which balance changes, who owns the next action, and what can still be changed before liquidity tightens. Pluvo computes the quick ratio from live balance-sheet data, excluding inventory, and explains a shift by the liquid assets and current liabilities that moved.

A strong workflow for quick ratio (acid-test ratio) separates the definition from the action: first agree what the term means, then decide how it is measured, when it changes, and who is accountable for the next step.

Pluvo computes the quick ratio from live balance-sheet data, excluding inventory, and explains a shift by the liquid assets and current liabilities that moved.

04

FAQ

What is the quick ratio?

Quick ratio compares liquid current assets with current liabilities, excluding inventory to give a stricter view of near-term liquidity. For quick ratio (acid-test ratio), the useful boundary is the source cash view, timing horizon, owner, liquidity exposure, and operating decision before payment timing, runway, or financing options change.

What is the difference between the quick ratio and the current ratio?

The boundary for quick ratio (acid-test ratio) differs from related terms by scope, source data, time period, and decision use. In this glossary, it covers the quick (acid-test) ratio: the formula excluding inventory, what it measures, and how it differs from the current ratio and the SaaS quick ratio, so teams should compare those boundaries before using it in reporting or planning.

05

Sources

Turn your data into a system for real decisions

Book a demo