Acid Test /Quick Ratio by Industry 2025
When looking at a company’s acid test ratio, it’s important to compare it not only to the general benchmark but also to industry-specific averages and the company’s historical performance for a more comprehensive assessment of its liquidity position.
The acid test ratio is widely used across various industries for financial analysis and decision-making. Its application spans multiple sectors including banking, manufacturing, retail, and technology
This article will explain our latest study on the industry average of acid test ratio and their comparisons.
Analysis of Industry Acid Test Ratio (Quick Ratio)
We have complied with the data provided that offers insights into the average quick ratio across various industries as of 2025.
| Industry | AVERAGE of Quick Ratio-2025 |
|---|---|
| Discount stores | 0.276 |
| Food retail | 0.644 |
| Medical distributors | 0.688 |
| Real estate investment trusts | 0.697 |
| Oil & gas pipelines | 0.714 |
| Catalog/Specialty distribution | 0.730 |
| Home improvement chains | 0.755 |
| Apparel/Footwear retail | 0.763 |
| Beverages: alcoholic | 0.767 |
| Tobacco | 0.781 |
| Railroads | 0.824 |
| Major telecommunications | 0.836 |
| Airlines | 0.839 |
| Cable/Satellite TV | 0.877 |
| Department stores | 0.877 |
| Oil refining/Marketing | 0.932 |
| Containers/Packaging | 0.944 |
| Wireless telecommunications | 0.958 |
| Food distributors | 1.024 |
| Hotels/Resorts/Cruise lines | 1.039 |
| Restaurants | 1.078 |
| Homebuilding | 1.102 |
| Electric utilities | 1.110 |
| Casinos/Gaming | 1.116 |
| Consumer sundries | 1.142 |
| Aluminum | 1.146 |
| Beverages: non-alcoholic | 1.156 |
| Financial publishing/Services | 1.166 |
| Pulp & paper | 1.166 |
| Hospital/Nursing management | 1.186 |
| Food: specialty/candy | 1.189 |
| Food: meat/fish/dairy | 1.195 |
| Gas distributors | 1.209 |
| Alternative power generation | 1.211 |
| Electronics/Appliance stores | 1.283 |
| Office equipment/Supplies | 1.286 |
| Wholesale distributors | 1.287 |
| Environmental services | 1.293 |
| Multi-line insurance | 1.300 |
| Water utilities | 1.309 |
| Household/Personal care | 1.353 |
| Drugstore chains | 1.366 |
| Building products | 1.377 |
| Automotive aftermarket | 1.385 |
| Home furnishings | 1.409 |
| Specialty stores | 1.416 |
| Engineering & construction | 1.436 |
| Internet retail | 1.449 |
| Contract drilling | 1.452 |
| Other consumer services | 1.469 |
| Commercial printing/Forms | 1.479 |
| Computer peripherals | 1.495 |
| Miscellaneous | 1.517 |
| Other transportation | 1.526 |
| Textiles | 1.527 |
| Auto parts: OEM | 1.540 |
| Broadcasting | 1.545 |
| Miscellaneous manufacturing | 1.551 |
| Oilfield services/Equipment | 1.568 |
| Air freight/Couriers | 1.608 |
| Chemicals: major diversified | 1.629 |
| Food: major diversified | 1.635 |
| Construction materials | 1.723 |
| Tools & hardware | 1.731 |
| Movies/Entertainment | 1.788 |
| Motor vehicles | 1.804 |
| Publishing: books/magazines | 1.818 |
| Medical/Nursing services | 1.819 |
| Personnel services | 1.859 |
| Recreational products | 1.870 |
| Finance/Rental/Leasing | 1.880 |
| Industrial conglomerates | 1.953 |
| Industrial specialties | 1.957 |
| Aerospace & defense | 1.977 |
| Electronics distributors | 1.983 |
| Computer communications | 1.989 |
| Telecommunications equipment | 2.069 |
| Services to the health industry | 2.110 |
| Integrated oil | 2.150 |
| Electronic components | 2.175 |
| Data processing services | 2.189 |
| Oil & gas production | 2.328 |
| Internet software/Services | 2.363 |
| Insurance brokers/Services | 2.445 |
| Chemicals: specialty | 2.507 |
| Electronics/Appliances | 2.509 |
| Metal fabrication | 2.532 |
| Real estate development | 2.558 |
| Regional banks | 2.621 |
| Pharmaceuticals: other | 2.692 |
| Steel | 2.706 |
| Industrial machinery | 2.734 |
| Specialty telecommunications | 2.827 |
| Advertising/Marketing services | 2.846 |
| Electronic equipment/Instruments | 2.881 |
| Medical specialties | 3.054 |
| Computer processing hardware | 3.062 |
| Information technology services | 3.337 |
| Other consumer specialties | 3.381 |
| Electronic production equipment | 3.402 |
| Chemicals: agricultural | 3.492 |
| Trucking | 4.062 |
| Semiconductors | 4.063 |
| Life/Health insurance | 4.115 |
| Media conglomerates | 4.263 |
| Publishing: newspapers | 4.270 |
| Agricultural commodities/Milling | 4.424 |
| Apparel/Footwear | 4.521 |
| Coal | 4.594 |
| Pharmaceuticals: generic | 4.738 |
| Property/Casualty insurance | 4.758 |
| Marine shipping | 5.480 |
| Pharmaceuticals: major | 5.870 |
| Investment managers | 6.136 |
| Major banks | 6.810 |
| Packaged software | 6.875 |
| Forest products | 6.910 |
| Trucks/Construction/Farm machinery | 7.067 |
| Biotechnology | 7.204 |
| Other metals/Minerals | 7.556 |
| Electrical products | 7.784 |
| Miscellaneous commercial services | 8.100 |
| Financial conglomerates | 8.229 |
| Managed health care | 8.965 |
| Precious metals | 9.675 |
| Investment trusts/Mutual funds | 27.033 |
| Investment banks/Brokers | 38.481 |
Data Sourced from TradingView on 27th Feb, 2025
Highest Quick Ratio (Most Liquid Industries)
A higher quick ratio generally indicates better short-term liquidity; extremely high ratio may suggest inefficient asset use. While a ratio of 1.0 or more is considered healthy, the acceptable range varies significantly by industry.
The most recent study shows the industries with the highest quick ratio.
Lowest Quick Ratio (Least Liquid Industries)
A quick ratio below 1.0 suggests that a company might struggle to pay its impending debts without relying on inventory or other less liquid assets. It’s important to note that quick ratio can vary between industries due to differences in business models and financial norms.
Industries with the lowest quick ratio are,
Comparison of Related Industry Groups – Quick Ratio Analysis
Retail Sector Comparison
Traditional retailers maintain lower quick ratio, with discount stores showing the lowest at 0.276 that reflects their business model. They operate with minimal cash relative to inventory, using rapid inventory turnover to generate cash flow.
Specialty retailers tend to have slightly higher ratio, with electronics and drugstore chains maintaining more liquidity than general merchandise retailers.
Internet retail shows higher liquidity (1.449) than physical stores, likely due to less investment in physical infrastructure and potentially faster cash conversion cycles.
Financial Services Comparison
Financial institutions show dramatic variations in liquidity. Investment banks maintain extremely high quick ratio (38.481) due to regulatory requirements and the need to meet client withdrawals and market obligations quickly. Insurance companies show a pattern where property/casualty (4.758) and life/health (4.115) maintain higher liquidity than multi-line insurers (1.300), possibly reflecting different risk profiles and regulatory requirements.
Regional banks (2.621) operate with significantly lower ratio than major banks (6.810), suggesting different risk management approaches or regulatory scrutiny.
Technology Sector Comparison
Software companies have higher liquidity (6.875) than hardware manufacturers due to lower capital requirements, higher margins, and subscription-based revenue models showing predictable cash flow. Semiconductor companies show strong liquidity (4.063), possibly reflecting the industry’s behaviour and downturns. IT services companies maintain moderate liquidity (3.337), balancing between software firms and the lower ratio of hardware businesses.
Healthcare Sector Comparison
Healthcare (Research) segments maintain higher liquidity than service providers. This reflects the long development cycles and high R&D costs, requiring cash reserves to fund multi-year research programs. Hospital management (1.186) and medical distributors (0.688) operate with much lower liquidity, with distributors showing ratio closer to traditional retail, reflecting their similar inventory-based business models.
Energy Sector Comparison
Energy companies show a clear pattern where upstream (production: 2.328) and integrated (2.150) operations maintain higher liquidity than midstream (pipelines: 0.714) and downstream (refining: 0.932) segments. This likely reflects greater price volatility exposure in exploration and production. Utilities across all types maintain remarkably consistent quick ratio just above 1.0, reflecting their regulated status, predictable cash flows, and similar capital structures.
Manufacturing Comparison
Heavy equipment manufacturers (7.067) maintain surprisingly high liquidity compared to other manufacturing segments, possibly due to cyclical demand and longer sales cycles. Basic materials producers like steel (2.706) and industrial machinery (2.734) show similar moderate ratio, while aluminum producers (1.146) operate with much tighter liquidity. Consumer products manufacturers generally maintain lower quick ratio than industrial manufacturers, likely due to more predictable demand and shorter production cycles.
Measure Your Financial Agility with the Acid Test
While the acid test ratio offers valuable insights, it should be considered with other financial metrics for assessment of a company’s financial stability. By focusing only on the most liquid assets, it provides a more accurate evaluation of a company’s financial stability compared to other liquidity ratio. Businesses can understand their capacity to meet financial needs without relying on inventory sales.
Finding the right investor who is excited to be part of your startup can be challenging. Compiling a ratio analysis can be exhausting.This is where Eqvista’s panel of experts can help you with everything from modeling to your company’s valuation. Contact us with your needs or queries here as soon as possible.
