What does a healthy quick ratio indicate about a business?

A healthy quick ratio indicates a business's ability to meet its short-term liabilities with its most liquid assets. Specifically, it measures whether a company can cover its current obligations without relying on the sale of inventory. A higher quick ratio suggests that a business maintains sufficient liquid assets, such as cash or easily convertible assets, compared to its current liabilities.

When a business has debts that are no more than half of ownership equity, it reflects a sound financial structure, which can positively influence the quick ratio. This balance between debts and equity indicates that the company is not overly reliant on debt financing, positioning it better to manage its short-term obligations effectively.

In contrast, having sufficient long-term investments, high inventory levels, or minimal operating expenses doesn't directly provide insight into a business's short-term liquidity, which is what the quick ratio primarily measures. Thus, while these factors are important for overall business health, they do not specifically inform the quick ratio's implications.