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Zale Corp (NYSE:ZLC)
Quick Ratio
0.15 (As of Jan. 2014)

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated as a company's Total Current Assets excludes Inventory divides by its Total Current Liabilities. Zale Corp's quick ratio for the quarter that ended in Jan. 2014 was 0.15.

Zale Corp has a quick ratio of 0.15. It indicates that the company cannot currently fully pay back its current liabilities.

Definition

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio excludes inventories from current assets.

Zale Corp's Quick Ratio for the fiscal year that ended in Jul. 2013 is calculated as

 Quick Ratio (A: Jul. 2013 ) = (Total Current Assets - Inventory) / Total Current Liabilities = (837.22 - 767.54) / 409.684 = 0.17

Zale Corp's Quick Ratio for the quarter that ended in Jan. 2014 is calculated as

 Quick Ratio (Q: Jan. 2014 ) = (Total Current Assets - Inventory) / Total Current Liabilities = (935.786 - 864.275) / 466.053 = 0.15

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Explanation

The quick ratio is more conservative than the current ratio because it excludes inventories from current assets. The ratio derives its name presumably from the fact that assets such as cash and marketable securities are quick sources of cash. Inventories generally take time to be converted into cash, and if they have to be sold quickly, the company may have to accept a lower price than book value of these inventories. As a result, they are justifiably excluded from assets that are ready sources of immediate cash.

In general, low or decreasing quick ratios generally suggest that a company is over-leveraged, struggling to maintain or grow sales, paying bills too quickly or collecting receivables too slowly. On the other hand, a high or increasing quick ratio generally indicates that a company is experiencing solid top-line growth, quickly converting receivables into cash, and easily able to cover its financial obligations. Such companies often have faster inventory turnover and cash conversion cycles.

The higher the quick ratio, the better the company's liquidity position.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Zale Corp Annual Data

 Jul04 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 quick ratio 0.34 0.31 0.36 0.40 0.58 0.22 0.18 0.21 0.18 0.17

Zale Corp Quarterly Data

 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 quick ratio 0.17 0.15 0.19 0.18 0.13 0.15 0.16 0.17 0.14 0.15
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