Quick Ratio
Calculate the quick ratio (also known as the acid-test ratio), a more stringent measure of liquidity that excludes inventory from current assets.
This ratio is also referred to as the Acid Test Ratio.
The quick ratio is calculated by adding cash and cash equivalents, short-term investments and accounts receivable, and dividing the sum by current liabilities. It leaves out inventory, prepaid expenses and other current assets, which cannot quickly be turned into cash. It provides insight into a company’s ability to cover its short-term liabilities using its most liquid assets without relying on inventory.
The formula is as follows:
\[\text{Quick Ratio} = (\text{Cash and Cash Equivalents} + \text{Short Term Investments} + \text{Accounts Receivable}) / \text{Current Liabilities}\]Also known as: acid-test ratio, liquid ratio.
Quick Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_quick_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["BA", "LMT", "RTX"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_quick_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
Leaving inventory aside, how well could Boeing, Lockheed Martin and RTX cover their current liabilities from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| BA | 0.2303 | 0.2191 | 0.194 | 0.2978 | 0.2969 |
| LMT | 0.3977 | 0.318 | 0.211 | 0.2489 | 0.3438 |
| RTX | 0.4935 | 0.3919 | 0.3726 | 0.3214 | 0.3766 |
Parameters
get_quick_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |