What is the formula for calculating the quick ratio?

The quick ratio, also known as the acid-test ratio, is a financial metric used to evaluate a company's ability to meet its short-term obligations with its most liquid assets. The formula for the quick ratio specifically focuses on those assets that can be quickly converted into cash, excluding inventory since it may not be as easily liquidated.

The correct formula for the quick ratio is expressed as the sum of cash, marketable securities, and receivables divided by current liabilities. This highlights the company's more immediate liquidity position, as it emphasizes assets that can be readily accessed to pay off current liabilities.

The other options either misrepresent the components necessary for calculating the quick ratio or do not focus on the same aspect of liquidity. For instance, one of the wrong choices includes total assets and liabilities, which is more relevant to the debt ratio rather than liquidity assessment, while another option considers total current assets without the necessary adjustment for inventories. Understanding the correct calculation of the quick ratio is crucial for evaluating a firm's short-term financial health effectively.