Business Terms Glossary
Acid-Test Ratio
Definition of Acid-Test Ratio
The Acid-Test Ratio is calculated by subtracting the inventory from the current assets and then dividing that result by current liabilities.
By looking at the acid-test ratio, or the acid ratio as some refer to it, you can get a quick snapshot of the health of a business.
Acid-Test Ratio References On This Site
These Gaebler.com articles mention this glossary term:
- Liquidity Ratios - Also referred to as an acid-test ratio, a quick ratio differs from a current ratio in...
- Liquidity Ratios - Also referred to as an acid-test ratio, a quick ratio differs from a current ratio in...
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