What is Quick Ratio?
A stricter liquidity measure than the current ratio, calculated as cash, marketable securities, and accounts receivable divided by current liabilities.
Formula
Quick Ratio = (Cash + Marketable Securities + AR) ÷ Current Liabilities
Quick Ratio in commercial lending practice
The quick ratio excludes inventory and prepaid expenses, providing a more conservative view of a borrower's ability to meet short-term obligations without relying on inventory liquidation. Particularly relevant for borrowers with significant inventory exposure or where inventory turnover is slow. Used in tandem with the current ratio to triangulate true liquidity position.
Related terms
Related concepts in commercial underwriting
Current Ratio
A liquidity metric calculated as current assets divided by current liabilities, measuring a borrower's ability to pay short-term obligations with short-term assets.
Read definitionWorking Capital
The difference between current assets and current liabilities, representing the short-term liquidity available to fund day-to-day operations.
Read definitionFinancial Spreading
The process of extracting financial data from tax returns, financial statements, and other documents and organizing it into a standardized format for credit analysis.
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How Quick Ratio shows up in AI underwriting
Aloan automates the underwriting analysis where quick ratio matters — spreading, global cash flow, credit memo generation — with source-cited audit trails on every figure. See it run on a real deal in your standardized format.
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