Let’s learn some business terms, shall we? The Acid Test is a ratio used to determine if a company has enough short-term assets to cover its immediate liabilities without selling off its inventory. It is a useful ratio to know if you are looking at investing in a business. You can figure out the acid test ratio by this simple equation (Cash + Accounts Receivable +Short-term Investments)/Current Liabilities. Pretty simple, huh?
Acid Test
Acid Test
Acid Test
Let’s learn some business terms, shall we? The Acid Test is a ratio used to determine if a company has enough short-term assets to cover its immediate liabilities without selling off its inventory. It is a useful ratio to know if you are looking at investing in a business. You can figure out the acid test ratio by this simple equation (Cash + Accounts Receivable +Short-term Investments)/Current Liabilities. Pretty simple, huh?