Acid Test Ratio
Back to Finance Glossary | Previous PageAn acid test ratio is similar to the current ratio or working capital ratio. The equation for the acid test ratio is current assets minus stocks divided by current liabilities. It can help to measure a company's liquidity from the perspective of its creditors. The ratio demonstrates whether a company would be able to repay its debts if it needed to satisfy creditors but had no time to sell any of its assets.
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