Quick Ratio Speed Test
The Quick Ratio measures a company’s ability to cover short-term liabilities using only its most liquid assets. React fast, calculate correctly — beat the clock!
How to Play: New numbers appear → enter Quick Ratio → submit before time runs out!
What Is the Quick Ratio?
The Quick Ratio (also called the Acid-Test Ratio) measures immediate liquidity — how easily a company can cover its short-term liabilities without selling inventory.
Quick Ratio Formula:
Quick Ratio = (Current Assets – Inventory) ÷ Current Liabilities
Why Quick Ratio Matters
- Shows ability to pay bills quickly
- Excludes inventory because it’s harder to convert to cash
- Useful for lenders and investors assessing liquidity risk
- Higher Quick Ratio = stronger short-term financial health
This game trains your liquidity analysis skills under time pressure — just like real finance decision-making!
Understanding Quick Ratio in Simple Words
The Quick Ratio answers:
👉 “If the company had to pay its short-term bills today, could it do it without selling inventory?”
A ratio above 1.0 generally means good liquidity.
Examples:
- Quick Ratio 1.5 → Strong
- Quick Ratio 0.8 → Weak
- Quick Ratio 2.5 → Very safe
This ratio is vital for evaluating financial stability.
❓ Frequently Asked Questions (FAQ)
- Why is inventory removed from the Quick Ratio?
Because inventory is the slowest current asset to convert to cash.
- What is a healthy Quick Ratio?
Generally:
- Above 1.0 = Good
- 0.7–1.0 = Caution
- Below 0.7 = Weak liquidity
- How is this different from the Current Ratio?
Current Ratio includes inventory.
Quick Ratio removes inventory for a stricter liquidity test.
- Can Quick Ratio be too high?
Yes.
Very high ratios may mean the company isn’t using assets efficiently.
- Does industry matter?
Absolutely.
Retailers usually have lower Quick Ratios.
Tech & services companies typically have higher ones.
- What does this game teach me?
You will learn:
- How to calculate Quick Ratio fast
- How liquidity impacts financial risk
- How inventory affects cash strength
- Real-world liquidity analysis skills