does not consider long term liabilities some of which may be due as early as 12 months from now 
may overstate the true collectability of accounts receivablemay overstate the true liquidity of marketable securities during economic downturnsexample of how to use the quick ratiopublicly traded companies may report the quick ratio figure under the liquidity financial health heading in the key ratios section of their quarterly reports below is the calculation of the quick ratio based on the figures that appear on the balance sheets of two leading competitors operating in the personal care industrial sector abc and xyz with a quick ratio of over 1 0 xyz appears to be in a decent position to cover its current liabilities as its liquid assets are greater than the total of its short term debt obligations abc on the other hand may not be able to pay off its current obligations using only quick assets as its quick ratio is well below 1 at 0 45 this shows that disregarding profitability or income xyz appears to be in better short term financial health regarding its ability to meet its short term debt requirements 