The ratio of current assets less inventories to total current liabilities. This ratio is the most stringent measure of how well the company is covering its short-term obligations, since the ratio only considers that part of current assets which can be turned into cash immediately (thus the exclusion of inventories). The ratio tells creditors how much of the company's short term debt can be met by selling all the company's liquid assets at very short notice. also called acid-test ratio.
Related information about acid-test ratio:
- Acid-Test Ratio Definition | Investopedia
A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is ...
- Quick ratio - Wikipedia, the free encyclopedia
\mbox{Quick (Acid Test) Ratio} = {\mbox{Cash. Note that Inventory ... Generally, the acid test ratio should be 1:1 or higher, however this varies widely by industry.
- Acid-Test Ratio Definition, Example & Formula | InvestingAnswers
We explain the definition of Acid-Test Ratio, provide a clear example of the formula, and explain why it's an important concept in business, finance & investing.
- Small Business Calculators: Quick ratio or acid test ratio
Use this business calculator to compute the quick or acid test ratio needed to run your business.
- Acid-Test Ratio - Financial Dictionary - The Free Dictionary
A measure of a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by subtracting inventories from current assets and ...
- Acid test ratio (or quick ratio) | Liquidity Ratios
The acid test ratio (or quick ratio) is a measurement of a company's ability to pay short term liabilities without selling inventory.
- Calculating the Acid-Test Ratio for a Business - For Dummies
Investors and lenders calculate the acid-test ratio — also known as the quick ratio or the pounce ratio — to test a business's short-term solvency. The.
- What is the acid test ratio? | AccountingCoach.com Q&A
The acid test ratio is similar to the current ratio except that Inventory, Supplies, and Prepaid Expenses are excluded. In other words, the acid test ratio.