UNDERWRITING GLOSSARY
Quick Ratio
Quick Ratio
Liquid current assets divided by current liabilities, generally excluding inventory.
What does Quick Ratio mean?
Liquid current assets divided by current liabilities, generally excluding inventory. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Quick Ratio in context
Cash and receivables of $500,000 against $400,000 current liabilities produce a 1.25 quick ratio.
Why it matters in financing
Quick Ratio can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related underwriting terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.