The difference between total current assets and total current liabilities. It indicates the extent to which short-term debt is exceeded by short term assets. This relationship gauges how able the business is to pay current debts using only its current assets.
Higher ratios indicate a greater ability to pay debts.
However, too high a ratio may indicate poor asset management. Quick assets are highly liquid, immediately convertible to cash. In addition to accounts receivable, they include marketable securities. This ratio compares the amount invested in the business by creditors with that invested by members. The higher the ratio, the higher the creditors' claims on the assets, possibly indicating the cooperative ix extending its debt beyond its ability to repay.