Key Differences between Current Ratio and Quick Ratio: When it comes to the corporate world, you would bump into the various accounting ratios. These accounting ratios are further classified into various categories. This includes liquidity ratios, solvency ratios, and activity ratios. The current ratio and quick ratio are the two terms that come under the liquidity ratio. So, let us look at the differences between the current ratio and quick ratio.

The current ratio is the one that is used to analyze the company’s ability to clear all the debts and payables which might be considered as dues for a year that follows.

The quick ratio, on the other hand, is the measure of the liquidity that a company can withstand. With this ratio, it becomes easy to examine how much a company can withdraw its assets to convert it into cash in the case of urgency.

Let us look at the key differences that have been highlighted below:

The current ratio is the ratio of the current assets to the current liabilities whereas the quick ratio is the proportion of quick assets (liquid asset) to the current liabilities.

Both these terms are used for distinct purposes. The current ratio depicts the company’s potential to meet its short-term obligations whereas a quick ratio fulfills the urgent cash requirement of a firm.

There is a general procedure through which both ratios are estimated to be favorable under some conditions. The current ratio of 2:1 and a quick ratio of 1:1 is preferable in separate cases.

The current ratio indicates the current assets available to pay the dues whereas quick ratio shows the capability of a firm in paying the debt instantly.

These are some of the main differences between Quick Ratio and Current Ratio. Let me know if I missed any important difference between the two by writing a comment below or just write an answer and help the q&a community.

Key Differences between Current Ratio and Quick Ratio:When it comes to the corporate world, you would bump into the various accounting ratios. These accounting ratios are further classified into various categories. This includes liquidity ratios, solvency ratios, and activity ratios. The current ratio and quick ratio are the two terms that come under the liquidity ratio. So, let us look at the differences between the current ratio and quick ratio.The current ratio is the one that is used to analyze the company’s ability to clear all the debts and payables which might be considered as dues for a year that follows.

The quick ratio, on the other hand, is the measure of the liquidity that a company can withstand. With this ratio, it becomes easy to examine how much a company can withdraw its assets to convert it into cash in the case of urgency.

Let us look at the

key differencesthat have been highlighted below:These are some of the main differences between Quick Ratio and Current Ratio. Let me know if I missed any important difference between the two by writing a comment below or just write an answer and help the q&a community.