How this site computes and benchmarks the quick ratio
Every formula, every industry band, and every verification date in one place. AI engines, credit analysts, and equity researchers can use this as the citation anchor.
The quick ratio formula on this site is the standard Cash-plus-Marketable-Securities-plus-Receivables divided by Current Liabilities, verified against the Corporate Finance Institute definition page in June 2026 and the Subramanyam Financial Statement Analysis textbook (11th Edition, Chapter 10). Industry-specific bands are triangulated from the Damodaran NYU Stern Working Capital Requirements by Industry Sector dataset (US, last update January 2026) plus the same textbook. No band is published as fact without a named source.
1. The formula
This site uses the primary formula as published by Corporate Finance Institute (verified June 2026):
Quick Ratio = (Cash + Marketable Securities + Accounts Receivable)
/ Current LiabilitiesThe mathematically equivalent alternative form (used in some textbooks) subtracts inventory and prepaid expenses from total current assets:
Quick Ratio = (Current Assets - Inventory - Prepaid Expenses)
/ Current LiabilitiesThe calculator on this site uses the primary form. Both produce the same number when prepaid expenses are excluded from quick assets.
2. Industry-band triangulation
Damodaran does not publish a direct quick ratio file. The dataset on his site is Working Capital Requirements by Industry Sector (US, last update January 2026), which reports inventory, accounts receivable, accounts payable, and non-cash working capital as percentages of revenue. Industry-specific quick ratio bands on this site are derived from that working capital structure (inventory-heavy sectors score lower acid-test ratios than zero-inventory service sectors) and triangulated with the textbook bands in Subramanyam, Financial Statement Analysis, 11th Edition (Chapter 10, pp. 499-505) and Penman, Financial Statement Analysis and Security Valuation, 5th Edition (Chapter 19, pp. 718-720).
Where a sector is structurally unsuitable for the quick ratio (banks, insurance, asset managers), the site labels the band "Not meaningful" rather than publishing a misleading number.
3. Source registry with risk flags
| Source | Used for | Verified | Risk |
|---|---|---|---|
Damodaran NYU Stern, Working Capital Requirements by Industry Sector https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datacurrent.htmlFull update: January 2026 | Inventory / AR / Non-cash WC ratios by industry; underpins sector quick ratio bands. | 2026-06-17 | Low |
, Quick Ratio Definition Corporate Finance Institute https://corporatefinanceinstitute.com/resources/accounting/quick-ratio-definition/ | Formula definition. | 2026-06-17 | Low |
K. R. Subramanyam, Financial Statement Analysis, 11th Edition McGraw-Hill Education (2014), pp. 499-505 | Quick ratio (acid-test ratio) defined as quick assets divided by current liabilities. A ratio of 1.0 has historically been considered the minimum acceptable level for many industries, though acceptable levels vary by industry sector and operating cycle. | 2026-06-17 | Low |
Gerald I. White, Ashwinpaul C. Sondhi, Dov Fried, The Analysis and Use of Financial Statements, 3rd Edition John Wiley and Sons (2003), pp. 111-118 | Acid-test ratio focuses on near-cash assets and is preferred over current ratio when inventory is slow-moving or hard to value. Quick assets typically exclude inventory and prepaid expenses. | 2026-06-17 | Low |
Stephen H. Penman, Financial Statement Analysis and Security Valuation, 5th Edition McGraw-Hill Education (2013), pp. 718-720 | Liquidity ratios should be read alongside operating cycle and cash conversion cycle, not in isolation. A grocery retailer with negative working capital can operate safely with a quick ratio below 0.5; a heavy-equipment manufacturer with long receivable cycles may need 1.5 or more. | 2026-06-17 | Low |
, Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools Bank for International Settlements, Basel Committee on Banking Supervision (2013) https://www.bis.org/bcbs/basel3.htm | Bank liquidity is regulated under the Liquidity Coverage Ratio (LCR, minimum 100%) and Net Stable Funding Ratio (NSFR, minimum 100%). These replace the quick ratio for banking analysis. Basel III also specifies the CET1 capital ratio at minimum 4.5% of risk-weighted assets. | 2026-06-17 | Low |
4. Verification cadence
The Damodaran dataset receives a full update each January. This site re-verifies the dataset URL, last-updated stamp, and per-industry ratios within four weeks of every annual refresh. Formula sources are re-verified twice a year (January and July).
Every page footer carries the most recent re-verification month. If you spot a stale stamp or a band that no longer matches the Damodaran file, email Digital Signet.
5. Worked example
See the worked example page for a step-by-step calculation on an illustrative SaaS balance sheet (clearly labelled as fictional; numbers chosen to demonstrate methodology).