The difference between total current assets and total current liabilities. Higher ratios indicate a greater ability to pay debts. However, too high a ratio may indicate poor asset management. Also called the Acid Test Ratio. Indicates the extent to which a company can pay current debt without relying on future sales.
Quick assets are highly liquid, immediately convertible to cash.
In addition to accounts receivable, they include marketable securities. Solvency is the relationship of long term debt to owners' equity. It indicates who is financing the permanent assets of the company. Indicates the amount invested in the business by the creditors with that invested by the members. The lower the ratio, the higher the creditors' claims on the assets, possibly indicating the cooperative is extending its debt beyond its ability to repay.