A liquidity ratio that measures a company's ability to meet short-term obligations using only the most liquid assets, calculated by dividing quick assets (current assets minus inventory) by current liabilities. It provides a more stringent test of liquidity than the current ratio.
The word 'quick' comes from Old English 'cwic' meaning 'alive' or 'moving,' referring to assets that can be quickly converted to cash. This ratio gained prominence in the 1930s when analysts needed better measures during the Great Depression.
The quick ratio is also called the 'acid test' because it's like testing gold with acid - it strips away everything non-essential (like inventory that might be hard to sell) to see what's really valuable and liquid underneath!
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