Current ratio calculations include all the firm's current assets, while quick ratio calculations only include quick or liquid assets. The quick ratio of a company is considered conservative because it offers short-term insights (about three months), while the current ratio offers long-term insights (a year or longer).
A higher ratio also means the company can access more resources in an emergency (for instance, if equipment needs emergency replacement). The more liquid cash a company has in its accounts, the more agility they have in the face of change.
Both the quick ratio and current ratio measure a company's short-term liquidity, or its ability to generate enough cash to pay off all debts should they become due at once.
In general, a good current ratio is anything over 1, with 1.5 to 2 being the ideal. If this is the case, the company has more than enough cash to meet its liabilities while using its capital effectively.
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