The Quick Ratio is a much more exacting measure than the Current Ratio. By excluding inventories, it concentrates on the really liquid assets. An acid-test of 1:1 is considered satisfactory unless the majority of your "quick assets" are in accounts receivable, and the pattern of accounts receivable collection lags behind the schedule for paying current liabilities.
The Quick Ratio or Acid Test ratio and is one of the best measures of liquidity and can be calculated using the following method:
Quick Ratio = Cash + Government Securities + Receivables / Total Current Liabilities |