A Fast Look @ Quick Ratio

The quick ratio is a way to look at how a company might (or might not) be able to handle it’s current short-term debt load.

This number tells you how many dollars(easily accessible) a company has per dollar of debt due the ‘current’ year. Occasionally inventory will be included but it is not easily accessible.

It should be immediately obvious that if an entity is not bringing in enough dollars to cover it’s short term expenses then it is not in the best possible financial shape. A more in depth look at how the entity is run may be in order. If the entity then sells off long-term assets to cover their short-term debt you may want to ask why current operations are not able to profit enough to do this.