The Accounting Quick Ratio, or “Acid Test,” is a financial measure used to assess a company’s short-term solvency. It measures the liquidity of a company by comparing its most liquid assets with its current liabilities. Specifically, it’s calculated by dividing total current assets (cash, marketable securities, and other highly liquid assets) by total current liabilities (all liabilities due within one year). A higher ratio indicates better overall liquidity, while a lower ratio signals potential trouble ahead. Put simply, the Quick Ratio provides an indication of whether a business has sufficient funds to cover its immediate liabilities without having to sell off any of its assets.