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BUSINESS FINANCING GLOSSARY

Quick Ratio

A stricter liquidity test: (current assets minus inventory) divided by current liabilities. Shows if you can pay bills without selling stock.

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Related terms

Accounts Payable (AP)→Money your business owes to suppliers and vendors for goods or services bought on credit. It sits on the balance sheet as a short-term liability.Cash Flow→The net movement of money in and out of your business over a period. Positive, steady cash flow is what most cash-flow lenders underwrite to.Current Ratio→Current assets divided by current liabilities. Above 1.0 means you can cover short-term obligations — a quick read on liquidity.

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