What is Quick Ratio ?

 

The quick ratio is the most commonly used ratio to generate credit scoring and therefore the creditworthiness of a company for the global community.

It highlights the degree of effective liquidity in a particular moment in time of the company letting able the community the company ability to meet with short term deadlines of payments due with other companies and indicators.

 

 

Better than the Current ratio in a more stringet liquidity test, the quick ratio is used as liquidity test "acid-test" since the inventories are excluded from the total current assets used in this ratio. In fact, it is important to evidence that only quick-assets (liquid assets) can be used in the ratio divided by the current liabilities (thos due in one year or less). 

The quick ratio could be also a warning financial indicator to aler the financial community of creditors included authorities since its value express the degree of solvency in a particular moment in time of the company so the quick ratio together with others can immediately support to deeply understand the degree of financial sustainability and its growing potential or need to rethinking by the management earlier than later. 

The quick ratio expresses in percentage terms the ability of the company to satisfy its short term liabilities (current liabilities) without using prepaid expences and resources lying in the stocks (inventories). 

 

UNIGIRO is a regtech facilitator. Its dynamic and extensive Key Performance Indicators (KPI) boost real-time monitoring of financial sustainability upgrading risk management regtech tools and corporate social governance.

MONITORING ENTERPRISE CREDIT RISK: the first Smart XBRL Data Analytics Engine Toolkit for Financial Risk Analysis that facilitate Creditors and Investors in monitoring company's creditworthiness and financial sustainability

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