FRQuickRatio(CurrentAssets, Inventories, CurrentLiabilities)
FRQuickRatio returns the ratio between CurrentAssets (less Inventories) and CurrentLiabilities (for example, QuickRatio = (CurrentAssets - Inventories) / CurrentLiabilities).
Since it takes time to convert raw materials to finished goods, and even finished goods are not really a liquid asset, this ratio removes inventories from current assets in calculating the liquidity of the company. It is a measure of how well current liabilities are covered by cash and ready cash equivalent. The higher the ratio, the higher the liquidity.
The following examples are applicable to both Basic and Crystal syntax:
FRQuickRatio is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. It can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.
Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.
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