Plain-language questions
Ask for quick ratio (acid test) per month, customer or product in the SQL Explorer with AI. The AI writes the SQL, you see the query and run it yourself; the AI only receives metadata.
KPI · Finance
Quick ratio (acid test): formula and example.
The quick ratio, also known as the acid-test ratio, compares readily available assets with current liabilities. Unlike the current ratio it leaves stock out, because stock cannot always be sold quickly at book value. The quick ratio shows whether you can pay your short-term debts without relying on selling stock.
Quick ratio (acid test) formula
(Current assets − stock) ÷ current liabilities
Worked example
At the end of 2025 Acme Groothandel had €3,300,000 of current assets, of which €1,400,000 was stock, and €2,200,000 of current liabilities. The quick ratio is (€3,300,000 − €1,400,000) ÷ €2,200,000 = €1,900,000 ÷ €2,200,000 = 0.86.
Fictitious figures for Acme Groothandel, a sample wholesaler.
How to read this KPI
A quick ratio below 1 means current liabilities are not fully covered by cash and receivables, so the business partly depends on selling stock. For a wholesaler holding a lot of stock, the quick ratio is naturally well below the current ratio. Compare it mainly with previous periods and with businesses that have a similar stock model.
Pitfalls with quick ratio (acid test)
- Counting prepaid expenses as readily available, when they never come back as cash.
- Counting receivables at face value when part of them will not be collected.
- Comparing the quick ratio of a stock-heavy business with that of a service company.
SQL & DAX
Calculating quick ratio (acid test) in SQL and DAX
Two examples on a fictitious data warehouse for Acme Groothandel: a PostgreSQL query and a measure for a Power BI model. Adjust table and column names to your own model.
WITH bal AS (
SELECT account_group, SUM(amount) AS balance
FROM gl_entries
WHERE entry_date <= current_date
AND account_group IN ('cash', 'receivables', 'other_current_assets', 'current_liabilities')
GROUP BY account_group
)
SELECT SUM(balance) FILTER (WHERE account_group <> 'current_liabilities') AS quick_assets,
SUM(balance) FILTER (WHERE account_group = 'current_liabilities') AS current_liabilities,
ROUND(SUM(balance) FILTER (WHERE account_group <> 'current_liabilities')
/ NULLIF(SUM(balance) FILTER (WHERE account_group = 'current_liabilities'), 0), 2) AS quick_ratio
FROM bal;Balance = CALCULATE(SUM(GL[Amount]), FILTER(ALL('Date'), 'Date'[Date] <= MAX('Date'[Date])))
Quick Ratio =
DIVIDE(
CALCULATE([Balance], GL[AccountGroup] IN {"cash", "receivables", "other_current_assets"}),
CALCULATE([Balance], GL[AccountGroup] = "current_liabilities")
)In ENABLE
Tracking this KPI in ENABLE
In your Power BI dashboard
Define the KPI as a measure in your Power BI model and show it in the portal, with "Last refreshed" next to it. Access profiles and optional row-level security decide who sees which figures.
Custom dashboards (pilot)
Add the KPI as a tile to a custom dashboard, compared with last year. The Dashboard Builder is a pilot and can be switched on per client.
Monthly targets
With the built-in Targets app you set a target for the KPI per month, so you see actuals and target side by side.
FAQ
Frequently asked questions
How do you calculate the quick ratio?
Subtract stock from current assets and divide the result by current liabilities. With €3,300,000 of current assets, €1,400,000 of stock and €2,200,000 of current liabilities, the quick ratio is 0.86.
What is the difference between the quick ratio and the current ratio?
The current ratio includes all current assets, the quick ratio leaves stock out. The bigger the gap between the two, the more a company's liquidity depends on selling stock.
Why is the quick ratio called the acid test?
The name refers to a strict test: could the business pay its short-term debts if it could no longer sell any stock? It is the same ratio under a different name.
Further reading
- KPI libraryFinancial KPIs: formulas and examplesFinancial KPIs show how profitable, liquid and solvent an organisation is. The data usually comes from your accounting package or ERP: general ledger entries, invoices and open items.Read more
- ResourcesHow to build a KPI dashboard: steps and examplesA KPI dashboard is an overview of the key figures you use to steer towards your goals, such as revenue, margin, on-time delivery or absenteeism. A good KPI dashboard does not start with the software, but with the decisions it needs to support. You then choose a limited number of KPIs, define them, sketch the dashboard and only then build it.Read more
- SolutionPower BI dashboard portal: share dashboards securelyShare your Power BI dashboards securely in your own portal, with role-based access.Read more
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