June 4, 2020  
 
  Articles for Entrepreneurs  
 

Acid-Test Ratio

 

 
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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.
(Definition continues below)

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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