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The current ratio is calculated by dividing a company's current assets by its current liabilities. Ratios of 1 or higher indicate short-term solvency. Because the current ratio compares short-term ...

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Reviewed by Charlene Rhinehart Fact checked by Suzanne Kvilhaug What Is a Liquidity Ratio? A liquidity ratio is a measurement ...

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The acid-test ratio, also known as the quick ratio, measures the liquidity of a company. Learn how to calculate acid-test ratio here.

David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning.

The quick ratio compares the value of a company's most liquid assets to the value of its current liabilities so investors can get a sense of how well it can cover its expenses in the short term.