The ideal quick ratio is

Quick Ratio (also called Acid-Test Ratio or Liquid Ratio) measures a company's ability to pay its current liabilities using only quick assets (most liquid assets).

The formula is:

$\text{Quick Ratio} = \frac{\text{Quick Assets}}{\text{Current Liabilities}}$

where Quick Assets = Current Assets - Inventory - Prepaid Expenses

The ideal quick ratio is 1:1, meaning the company has ₹1 of quick assets for every ₹1 of current liabilities.

This indicates that:

• The business can meet all its immediate obligations with readily available liquid assets
• There's adequate liquidity without depending on inventory conversion
• The company maintains a safe cushion for short-term debt repayment

A ratio of 2:1 (as in current ratio) is not expected here because quick ratio is more stringent—it excludes less liquid items like inventory. Hence, 1:1 is considered ideal and sufficient.