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Quick Ratio

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lightbulbAbout this topic
The quick ratio, also known as the acid-test ratio, is a financial metric that measures a company's ability to meet its short-term liabilities with its most liquid assets, excluding inventory. It is calculated by dividing current assets minus inventory by current liabilities, providing insight into a firm's short-term financial health.
lightbulbAbout this topic
The quick ratio, also known as the acid-test ratio, is a financial metric that measures a company's ability to meet its short-term liabilities with its most liquid assets, excluding inventory. It is calculated by dividing current assets minus inventory by current liabilities, providing insight into a firm's short-term financial health.

Key research themes

1. How can adjusted ratios effectively control for size-related correlations in morphometric and financial data?

This research area addresses the fundamental statistical challenge that simple ratios often fail to eliminate correlations with size or scale in morphometric or financial datasets. Adjusted ratios, incorporating regression-based corrections and allometric scaling, are investigated as improved methods to control for size effects, stabilize expected values, and produce meaningful normalized variables. Proper formulation and estimation of parameters using least-squares regression is crucial to avoid residual size correlations. Evidence also focuses on the consequences of ratio transformation on variance and distributional properties.

Key finding: This study formulates three adjusted ratio methodologies—intercept-adjusted ratios, allometrically adjusted ratios, and fully adjusted ratios—that remove size correlations by incorporating regression intercept correction and... Read more
Key finding: This paper critically examines the assumption that ratios remove size effects only when numerator and denominator are strictly proportional with constant multiplicative size influences. The authors propose new ratio-like... Read more
Key finding: The paper develops statistical inference methods for ratios of means for large paired and unpaired samples under conditions of finite and infinite variance. Using central limit theorem and stable distribution theory, the... Read more
Key finding: The study highlights that standard ratios remove size only under strict proportionality of numerator and denominator variables with constant multiplicative size effects. Departures from proportionality due to stochastic... Read more

2. What are the implications of liquidity and quick ratio metrics on banking profitability and financial health?

This theme explores the empirical relationship between liquidity indicators, especially the quick ratio, and profitability measures in banking and corporate settings. Studies investigate how variations in liquidity affect banks' ability to generate profits, maintain solvency, and withstand financial crises. The quick ratio emerges as a key metric linking liquidity management to return on equity or assets, with evidence from Islamic, Jordanian, and Indian banking sectors, and different manufacturing industries.

Key finding: This empirical study on Indonesian Islamic banks from 2005-2009 establishes that liquidity, measured via quick ratio, financing to deposit ratio, and loan to asset ratio, significantly influences profitability measured as... Read more
Key finding: Using panel data from 2005 to 2011, the research empirically confirms a significant relationship between liquidity—particularly the quick ratio—and profitability expressed as return on assets (ROA) in Jordanian banks. The... Read more
Key finding: Analyzing key financial ratios including the quick ratio over 2012-2021, this paper documents trends in liquidity and profitability of State Bank of India (SBI). The quick ratio serves as a proxy for financial health and aids... Read more
Key finding: Examining working capital components, particularly current and quick ratios, across selected Indian cement companies during 2015-2020, this study identifies significant variations that relate to liquidity and operational... Read more
Key finding: Employing regression analysis on company data, this research identifies that liquidity ratios including the current and quick ratios collectively influence profit growth in manufacturing companies; however, individual effects... Read more

3. How do educational approaches and conceptual treatments of ratios and proportional reasoning affect mathematical understanding?

Research on pedagogy and conceptual development of ratios focuses on how students understand and apply ratio and proportion concepts in mathematics. Studies investigate semantic types of ratio problems, development stages of proportional reasoning, visual and contextual learning aids, and challenges arising from additive versus multiplicative thinking. Implications include curriculum design and instructional strategies to foster robust conceptual frameworks bridging intuitive notions with formal ratio reasoning.

Key finding: Through task-based assessment of students Grades 5 to 9, the study uncovers developmental stages in proportional reasoning linked to semantic types of ratio problems (part-part-whole, associated sets, well-chunked measures,... Read more
Key finding: This comprehensive educational resource articulates key expectations and activities for ratio understanding, emphasizing the multiplicative structure over additive misconceptions. It introduces instructional activities... Read more
Key finding: Highlighting the cognitive challenges in teaching fractions, this pedagogical analysis illustrates how conventional processes obscure the conceptual meanings of fractions and ratios by overemphasizing procedural manipulations... Read more
Key finding: The paper presents authentic applications combining ratio concepts with systems of equations to solve practical mixing problems such as chemical solution compositions. It clarifies distinctions between ratio operations and... Read more

All papers in Quick Ratio

Cement plays a crucial role in India's infrastructure projects and contributes significantly to the nation's gross domestic product (GDP) and employment. India's urbanization relies heavily on this sector as the world's second-largest... more
Every stakeholder has interest in the liquidity situation of a company. Suppliers of goods will review the liquidity of the company before selling goods on credit. Employees should also be worried about the company’s liquidity to know... more
The purpose of this research is to know how profitability and liquidity ratios influence the growth of profit of manufacturing companies sector food and beverages listed on Indonesia Stock Exchange period 2010-2012. The variables examined... more
Financial statement fraud has had the most significant monetary impact on companies compared to the other categories of fraud. Over half of the financial statement frauds were committed through improper revenue recognition. According to a... more
The purpose of this research is to analyze the liquidity ratio and leverage ratio to profitability at PT. Bentop Legion Yakin that located in Batam which was held from January 2016 to December 2020. The purpose of this research is to... more
Financial statement fraud has had the most significant monetary impact on companies compared to the other categories of fraud. Over half of the financial statement frauds were committed through improper revenue recognition. According to a... more
This article is to analyze and evaluate working capital management of selected cement companies.  The main purpose of this study is to find out the liquidity position of selected cement companies in India, five companies were selection... more
After years of stable growth, recovering from a severe economic crisis in 1997, the indonesian economy was hit by the global economic downturn in 2008. The global financial crisis has affected a number of banking institutions, including... more
Every stakeholder has interest in the liquidity situation of a company. Suppliers of goods will review the liquidity of the company before selling goods on credit. Employees should also be worried about the company’s liquidity to know... more
Different financial decisions are necessary for financial prosperity and also firm continued activity. An incorrect decision about financial structure may lead into financial pressures and finally bankruptcy. Managers usually determine... more
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