Current ratio (excluding inventory)
factor.formula
Quick ratio calculation formula:
Quick assets calculation formula:
in:
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Measures a company's ability to repay its current liabilities immediately. The higher the value, the stronger its short-term debt repayment ability.
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Assets that a company can quickly convert into cash in the short term, including cash, short-term investments, accounts receivable, etc., excluding inventory and prepaid expenses with poor liquidity.
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Debts that a company needs to repay within one year or a normal operating cycle, such as short-term loans and accounts payable.
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Assets that a company can convert into cash or consume within one year or a normal operating cycle, including cash, short-term investments, accounts receivable, inventory, etc.
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Materials held by an enterprise for sale in the course of its daily operations or for production.
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The money that an enterprise pays in advance to a supplier under a purchase contract or a service contract usually has poor liquidity.
factor.explanation
The current ratio (excluding inventory) is an important indicator to measure the short-term debt repayment ability of an enterprise. The higher the value, the stronger the ability of the enterprise to repay current liabilities in the short term. Compared with the current ratio, after excluding inventory and prepaid accounts, this indicator pays more attention to the ability of the enterprise to repay short-term debts with quick assets (such as cash, short-term investments, accounts receivable, etc.), and can better reflect the actual short-term debt repayment ability of the enterprise. Because inventory is usually slow to realize cash and may be subject to impairment risks, and prepaid accounts are usually less liquid, when analyzing short-term debt repayment ability, excluding these two items can more accurately assess the immediate repayment ability of the enterprise. This indicator is usually used to analyze the liquidity risk of an enterprise, and is of great significance for judging whether the enterprise has short-term debt repayment difficulties. Especially in the economic downturn cycle or when the business conditions of the enterprise are not good, the reference value of this indicator is higher.