Liquidity benchmark · 11 sectors
Quick Ratio by Industry (2025 Benchmarks)
Quick ratios vary by more than 4x across sectors — Healthcare companies average 2.6 while Consumer Staples routinely sit at 0.6. This table shows the sector median and typical range for 11 GICS sectors so you can judge whether a company's liquidity is strong, normal, or stretched relative to its industry — without relying on inventory. Use the quick ratio calculator to compute it for any ticker, or screen for companies above or below sector thresholds with the quick ratio screener.
2025 data · 11 sectors
Quick Ratio Benchmarks by Sector
| Sector | Median Ratio | Typical Range | Notes |
|---|---|---|---|
| Technology | 2.2 | 1.3–4.0 | Asset-light SaaS and cloud platforms hold large cash balances with minimal inventory — quick ratios consistently above 2.0; hardware and semiconductor companies sit at 1.3–1.8 on accounts receivable and supplier payables |
| Healthcare | 2.6 | 1.6–4.5 | Biotech and early-stage pharma accumulate cash with negligible inventory — quick ratios above 3.0 are common; large pharma at 2.0–2.5 on receivables from distributors; hospitals and device makers at 1.6–2.0 |
| Consumer Discretionary | 0.9 | 0.5–1.5 | Retailers and auto OEMs carry large inventory positions that are stripped out in the quick ratio — a dramatic drop from the current ratio; e-commerce and luxury brands closer to 1.0–1.5 on lower inventory density |
| Consumer Staples | 0.6 | 0.4–1.0 | Mass-market grocery, packaged foods, and beverage companies maintain large raw-material and finished-goods inventories — removal drops the quick ratio well below 1.0; branded premium companies at 0.7–1.0 |
| Financials | N/A | N/A | Banks and insurers are not analyzed with the quick ratio — current ratio concepts do not apply to firms whose core business is maturity transformation; use capital adequacy and net interest margin instead |
| Industrials | 1.1 | 0.7–1.6 | Defense and precision manufacturers hold work-in-process inventory — removing it pulls the quick ratio below the current ratio; freight and services businesses at 1.3–1.6 on lower inventory; heavy equipment at 0.7–1.0 |
| Energy | 0.9 | 0.6–1.4 | Integrated majors and E&P companies hold crude, refined products, and well-site supplies as inventory — stripping these out reduces liquidity significantly; midstream and services companies at 1.0–1.4 on lower physical stocks |
| Materials | 1.1 | 0.7–1.6 | Mining and metals companies hold ore and processed-metal inventories; chemicals companies carry raw-material stocks — both pull the quick ratio down versus the current ratio; specialty chemicals at 1.2–1.6 |
| Real Estate | 0.6 | 0.4–0.9 | REITs hold properties rather than liquid current assets — quick ratio mirrors the low current ratio; cash and rent receivables are the main liquid items; property inventory in homebuilders pulls it lower still |
| Utilities | 0.7 | 0.4–0.9 | Fuel, materials, and spare-parts inventories are stripped out — the quick ratio is slightly lower than the current ratio; regulated utilities roll short-term debt continuously so a ratio below 1.0 is structurally normal |
| Communication Services | 1.3 | 0.8–2.2 | Streaming and digital platforms carry minimal inventory — quick ratio is close to the current ratio; telecom carriers at 0.8–1.1 on device and equipment inventories; pure-digital platforms at 1.8–2.2 |
What Is a Good Quick Ratio?
The quick ratio — also called the acid-test ratio — measures whether a company can cover its short-term obligations using only its most liquid assets: cash, marketable securities, and accounts receivable. Unlike the current ratio, it excludes inventory and prepaid expenses, making it a stricter liquidity test.
Above 1.5 — Strong liquidity. The company holds substantially more liquid assets than near-term obligations, even after stripping out inventory. Technology and Healthcare companies routinely operate above 1.5 because they accumulate cash and carry minimal physical inventory. A very high quick ratio (above 4–5) may indicate excess idle cash.
1.0 to 1.5 — Healthy for most sectors. A ratio near 1.0 means liquid assets roughly match current liabilities — adequate coverage with a modest buffer. Industrials, Communication Services, and asset-light service businesses commonly operate in this range. Lenders and suppliers understand this profile.
Below 1.0 — Sector-dependent. Consumer Staples and Consumer Discretionary companies routinely fall below 1.0 because of heavy inventory positions — not because they are illiquid. These businesses generate predictable operating cash flow that services their obligations. For a technology company or professional services firm, a quick ratio below 1.0 is a warning sign worth investigating.
Always compare the quick ratio to the sector benchmark above. Use the current ratio by industry page alongside this metric — the gap between the two ratios reveals how much of the company's liquidity depends on inventory liquidation.
How to Use This Data
1. Compare the quick ratio to the current ratio
The gap between a company's current ratio and quick ratio tells you how much its liquidity depends on inventory. A Consumer Staples company at current ratio 1.1 and quick ratio 0.6 is normal — large inventory is core to the business. A manufacturer where the quick ratio has fallen to 0.5 while the current ratio is 1.8 deserves scrutiny: most of its "liquidity" is stuck in inventory that may not convert quickly. Use both the quick ratio calculator and current ratio calculator side by side.
2. Benchmark within sector, not across sectors
A Consumer Staples company at 0.6 and a Technology company at 0.6 are in completely different situations. Staples at 0.6 is at its sector median — perfectly normal. Tech at 0.6 is more than 3 standard deviations below the Technology median of 2.2 and likely signals a cash crunch or aggressive share buybacks. The sector benchmark table above is the correct reference — not a universal "must be above 1.0" heuristic.
3. Track the trend over 4–8 quarters
A declining quick ratio over multiple quarters is a more useful signal than a single snapshot. A ratio falling toward 1.0 in a sector where peers sit at 1.5 can reflect intentional working capital optimization — or early signs that the company is drawing down cash to fund losses. Pair the quick ratio trend with free cash flow and the working capital calculator to distinguish between the two scenarios.
Common questions
Quick ratio by industry — answered directly.
What is a good quick ratio by industry?
A quick ratio above 1.0 is generally considered healthy for most operating businesses — it means the company can cover its short-term obligations with liquid assets (cash, investments, receivables) without relying on selling inventory. But the threshold varies sharply by sector. Technology and Healthcare companies routinely sit above 2.0 because they hold large cash balances and carry minimal inventory. Consumer Staples and Consumer Discretionary companies commonly fall below 1.0 because their business models depend on large inventory positions. Always compare to the sector median above, not to a universal standard.
How is the quick ratio different from the current ratio?
The current ratio counts all current assets — including inventory and prepaid expenses — in the numerator. The quick ratio removes those items, leaving only cash, short-term investments, and accounts receivable. The result is a more conservative liquidity test: it answers whether the company can meet its obligations even if it cannot sell its inventory quickly. For inventory-heavy businesses like retailers, manufacturers, and food companies, the quick ratio is substantially lower than the current ratio and is the more relevant stress-test. For asset-light software companies, the two ratios are nearly identical because there is almost no inventory to remove.
How is the quick ratio calculated?
The quick ratio equals (Cash + Short-term Investments + Accounts Receivable) ÷ Total Current Liabilities. An equivalent formula is (Total Current Assets − Inventory − Prepaid Expenses) ÷ Total Current Liabilities. All inputs come from the balance sheet. For example, a company with $200M cash, $100M in receivables, no marketable securities, and $250M in current liabilities has a quick ratio of 1.2 — comfortably above 1.0. A second company with the same numbers but $300M in inventory has a current ratio of (200+100+300)/250 = 2.4, and a quick ratio of (200+100)/250 = 1.2. The inventory exclusion is the only difference.
Why do Consumer Staples companies have quick ratios below 1.0?
Consumer Staples companies — grocery chains, packaged-food manufacturers, beverage companies — run their businesses on large, continuous inventory positions. A cereal maker has warehouses full of grain, packaging, and finished product at any given moment. When inventory is stripped from current assets in the quick ratio formula, the numerator shrinks dramatically. Simultaneously, these companies leverage their purchasing power to extend payables, which keeps current liabilities elevated. The combination routinely puts the quick ratio between 0.4 and 0.8. This is not a distress signal: these companies generate predictable operating cash flow, and lenders understand the model. Compare them to the sector median rather than to a 1.0 threshold.
Related Tools & Resources
Quick Ratio Calculator
Compute (cash + investments + receivables) ÷ current liabilities for any ticker and benchmark against the sector median above.
Quick Ratio Screener
Screen for companies above or below liquidity thresholds across all sectors using the acid-test ratio.
Current Ratio by Industry
Compare the current ratio — which includes inventory — to the quick ratio to see how inventory-dependent a company's liquidity is.
Working Capital Calculator
Compute absolute working capital and track the trend alongside the quick ratio for a complete liquidity picture.
Deep analysis · any ticker
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