{
  "id": 6135314,
  "title": "Current Ratio vs Quick Ratio, and Debt to Equity",
  "url": "https://urgent.news/2026/09/07/current-ratio-vs-quick-ratio-and-debt-to-equity",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-07T13:00:13.000Z",
  "source": {
    "name": "Dev.to",
    "slug": "dev-to",
    "url": "https://dev.to/michaelnocito/current-ratio-vs-quick-ratio-and-debt-to-equity-28en"
  },
  "original_language": "en",
  "account": "Two key financial metrics used to evaluate a company's financial health are the current ratio and the quick ratio. The current ratio compares a company's current assets to its current liabilities, while the quick ratio is similar but excludes inventory from the current assets. These ratios help answer two important questions: whether the company can pay its bills due within the next year (liquidity), and how much of the company's assets were financed through debt (leverage).\n\nThe current ratio is calculated by dividing current assets by current liabilities. A ratio above 1.0 indicates that the company has more current assets than current liabilities, meaning it can cover its short-term obligations. For example, Northlight has current assets of $1,260,000 and current liabilities of $700,000, resulting in a current ratio of 1.80. This suggests that Northlight has enough assets to meet its short-term financial obligations comfortably.\n\nThe quick ratio, on the other hand, is calculated by subtracting inventory from current assets and then dividing by current liabilities. This ratio provides a more stringent test of liquidity, as it only considers assets that can be quickly converted to cash, such as cash, receivables, and other liquid assets. In Northlight's case, after excluding inventory ($490,000), the quick ratio is calculated as $770,000 divided by $700,000, resulting in a quick ratio of 1.10. This indicates that Northlight can meet its short-term obligations even if it cannot sell its inventory, further demonstrating its liquidity position.",
  "summary": "By Michael Nocito , data analyst · Published August 11, 2026 By the end of this page you can look at a balance sheet and answer two questions a lender asks first: can this company pay the bills that are about to come due, and how much of it was bought with borrowed money. You will know the three ratios, the SQL for all of them, and the four places where the definition, not the arithmetic, decides…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}