Quick (acid-test) Ratio
The acid-test ratio is similar to the current ratio except that it excludes inventory. It is calculated as follows:
|Quick ratio =||(Current assets - inventories)|
For Jimco, this ratio is
|$11,700,000||= 1.17 times|
industry average = 0.61 times
A quick ratio of 1.0 or greater is occasionally recommended, but, as with the current ratio, an acceptable value depends largely on the industry. v
Efficiency ratios are used to measure the speed with which various accounts are converted into sales or cash. Some of these are: inventory turnover, average collection period, fixed asset turnover, total asset turnover.