Step 3 — Calculate the Quick Ratio:

Inventory is excluded because it can’t be turned into cash quickly, so it can’t help a company pay its bills. A quick ratio of 1:1 means a company has exactly enough assets to pay its liabilities.

A quick ratio greater than 1 means a company has more than enough assets to pay its liabilities. Anything below 1 means the company doesn’t have enough assets to pay its short-term liabilities.

Calculate the quick ratio in an empty cell to the right of the far-right column by typing:

“=(Total Current Assets cell minus Inventory cell) divided by Total Current Liabilities cell”

Screenshot of Quick Ratio calculation.

Netflix doesn’t have an inventory balance, so that will be zero in our calculation. Our calculation tells us their quick ratio of around 1.5, which means they have enough assets to pay their short-term obligations (and then some).