Show the quick ratio or acid test, Strategic Management

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Q. Show the Quick ratio or acid test?

Quick ratio or acid test

Quick ratio = Current assets less inventories / Current liabilities (times)

This ratio measures the immediate solvency of a business as it removes the inventories out of the equation, which is the item least representing cash, as it needs to be sold. Normal is around 1: 1 however this varies within different industries.

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