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Comparing current, quick and cash ratio components

With cash 200, receivables 400, inventory 300 and current liabilities 500, the stated current, quick and cash ratios are 1.8×, 1.2× and 0.4×.

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Keep the model’s missing components explicit

Short-term marketable securities, prepaids and other current assets are zero in this exercise. Cash, receivables and inventory are current and non-overlapping. The liability denominator is the same 500 for all three ratios.

Calculate each selected numerator

Same denominator, different asset coverage
MeasureNumeratorDivision
Current ratio900900/500 = 1.8×
Quick ratio600600/500 = 1.2×
Cash ratio with short-term securities200200/500 = 0.4×

Change an asset classification without changing the total

If 100 of cash is reclassified as short-term marketable securities with all other inputs fixed, these three defined ratios remain unchanged. If the comparison source instead uses a cash-only numerator, its cash-only figure changes. The definition determines that result.

Keep timing and quality outside the arithmetic claim

The table establishes the ratios under the supplied balances. It does not establish receivable collectability, inventory sale timing or a safe credit limit. Investigate those separately.

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