The quick ratio can be calculated by:

**(Current assets – Inventory) divided by total current liabilities**

The quick ratio is a measure of liquidity. The greater the value of the quick ratio, the better. It is also important to measure the quick ratio of a company against the quick ratio of other companies within the industry.

**Study the current ratio to complement quick ratio**

One should also study the current ratio to complement the quick ratio. Both the current ratio and the quick ratio measure the company’s ability to pay off short-term obligations.

Read : Current Ratio