Stocks and Bonds

Liquidity Ratios – Current Ratio and Quick Ratio (Acid Test Ratio)

This finance video tutorial provides a basic introduction into two liquidity ratios – the current ratio and the quick ratio also known as the acid test ratio. The current ratio is equal to the current assets divided by the current liabilities. A current ratio that is greater than 1 means that the current assets are greater in value than the current liabilities. The quick ratio is equal to a company’s liquid assets divided by its current liabilities.

Disclaimer:
The information in this video is used for educational purposes only. It should not be construed as financial advice. I’m not a financial advisor nor am I recommending which stocks you should invest in. My goal in this video is to simply explain how things work. Investments in stocks involve substantial risk including total loss of principal. It is wise for you to do your own research and due diligence before making any investment decisions.