Quick Assets

AAA

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.

RELATED TERMS
  1. Quick Ratio

    An indicator of a company’s short-term liquidity. The quick ratio ...
  2. Spontaneous Assets

    The assets of a company that are accumulated automatically as ...
  3. Goodwill To Assets Ratio

    A ratio that measures how much goodwill a company is recording ...
  4. Current Assets

    1. A balance sheet account that represents the value of all assets ...
  5. Current Ratio

    A liquidity ratio that measures a company's ability to pay short-term ...
  6. Inventory

    The raw materials, work-in-process goods and completely finished ...
Related Articles
  1. Investing Basics

    Analyze Investments Quickly With Ratios

    Make informed decisions about your investments with these easy equations.
  2. Personal Finance

    Breaking Down The Balance Sheet

    Knowing what the company's financial statements mean will help you to analyze your investments.
  3. Mutual Funds & ETFs

    Major Blunders In Portfolio Construction

    Do you have the best mix of investments? Find out how to make sure.
  4. Mutual Funds & ETFs

    Money Market Mutual Funds: A Better Savings Account

    An good alternative to the traditional savings account is the money market mutual fund. It's easy, safe and has better returns.
  5. Fundamental Analysis

    Dynamic Current Ratio: What It Is And How To Use It

    Learn why this ratio may be a good alternative to the current, cash and quick ratios.
  6. Fundamental Analysis

    What role does discounted cash flow (DCF) play in stock valuation?

    Understand the meaning and significance of discounted cash flow, and learn how market analysts commonly use this stock evaluation tool.
  7. Fundamental Analysis

    What is the first day of the third quarter?

    Learn when the first day of the third quarter begins. Explore how reported financial results may have a profound impact on the price of shares.
  8. Fundamental Analysis

    What is the difference between revenue and sales?

    Learn to distinguish between a company's revenue and its sales, and see why the distinction is important when analyzing a company's financial performance.
  9. Fundamental Analysis

    What is the difference between revenue and income?

    Understand the difference between income and revenue, how these terms are often confused in day-to-day usage and how to identify each on an income statement.
  10. Fundamental Analysis

    What is the difference between revenue and profit?

    Understand the difference between revenue and profit, two key concepts in business accounting, including where each can be found on an income statement.

You May Also Like

Hot Definitions
  1. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  2. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  3. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  4. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  5. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  6. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
Trading Center