Quick Ratio = (Cash + Cash Equivalents + Marketable Securities + Accounts Receivable) ÷ Current Liabilities
Exclude inventory and prepaid expenses from quick assets
Add up all quick assets
Add up all current liabilities
Divide quick assets by current liabilities
Example: ($10,000 + $5,000 + $15,000 + $20,000) ÷ $25,000 = 1.6
A higher ratio indicates better short-term liquidity
A ratio of 1.0 means quick assets equal current liabilities