# What is a normal quick ratio?

**quick ratio**, also known as the

**acid-test ratio**is a type of

**liquidity ratio**, which measures the ability of a company to use its near

**cash**or

**quick**assets to extinguish or retire its current liabilities immediately. A

**normal**liquid

**ratio**is considered to be 1:1.

In respect to this, what is considered a good quick ratio?

A result of 1 is **considered** to be the normal **quick ratio**, as it indicates that the company is fully equipped with exactly enough assets to be instantly liquidated to pay off its current liabilities.

Similarly, what if quick ratio is less than 1? A company with a **Quick Ratio** of **less than 1** cannot pay back its current liabilities. **Quick Ratio** = (**Cash** and **cash** equivalent + Marketable securities + Accounts receivable) / Current liabilities. **Cash** and **cash** equivalents are the most liquid assets found within the asset portion of a company's balance sheet.

Similarly one may ask, how do you interpret a quick ratio?

**Interpreting** the **Quick Ratio** A **quick ratio** that is greater than 1 means that the company has enough **quick** assets to pay for its current liabilities. **Quick** assets (cash and cash equivalents, marketable securities, and short-term receivables) are current assets that can be converted very easily into cash.

Is high quick ratio good or bad?

A **quick ratio** of 1 or above is considered **good**. When the **ratio** is at least 1, it means a company's **quick** assets are equal to its current liabilities. This means the company should not have trouble paying short-term debts. The **higher** the **ratio**, the **better**.