This is a measurement, also known as a quick ratio, that determines how quickly a company can run out of cash if sales falter. This is a fairly conservative metric in that it only considers highly liquid assets, but it is a useful indicator that many retailers and brands rely upon. The metric is calculated as liquid assets ex-inventory, divided by current liabilities, or (cash + receivables +other liquid assets - inventory)/ current liabilities. The higher the ratio, the better.

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