Quick Assets

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DEFINITION of 'Quick Assets'

Anything having commercial or exchange value that can easily be converted into cash, or that is already in cash form. Quick assets are the highly liquid assets held by a company, including cash, marketable securities and accounts receivable. Quick assets are often calculated as current assets (cash + marketable securities + accounts receivable) minus inventories (since inventories are often a firm's least-liquid current assets). Quick assets are used by companies to calculate certain financial ratios that are used in decision making, including the quick ratio.

INVESTOPEDIA EXPLAINS 'Quick Assets'

The quick ratio (sometimes called the quick asset ratio or "acid test") is a financial ratio that divides a company's cash + marketable securities + accounts receivable by its current liabilities.

By keeping inventories out of the equation, the quick ratio allows the company to focus on its quick assets – those that could be quickly converted to cash – and helps the company determine if it could meet its financial obligations if sales (and revenues) were to cease.

The current ratio, on the other hand, is equal to current assets (including inventories and any assets that could be converted into cash within a "normal" 12-month operating period) divided by current liabilities.

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