# Acid-test ratio

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 Acid-test ratio
Sayed Arif

Student of BMS at RIZVI INSTITUTE OF MANAGEMENT AND STUDIES AND RESEARCH
Mumbai, Maharashtra

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Location: Mumbai, Maharashtra
Acid-test ratio - December 10th, 2013

what is acid-test ratio ?discuss acid-test ratio in detail?

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 (2 (permalink)) Asad Khan   Student of BMS at RIZVI INSTITUTE OF MANAGEMENT AND STUDIES AND RESEARCH Mumbai, Maharashtra Management Paradise Newbie   Status: Offline Posts: 111 Join Date: Dec 2013 Location: Mumbai, Maharashtra Re: Acid-test ratio - December 10th, 2013 The acid-test ratio is a measure to reflect whether the company has sufficient assets to meet its short-term liabilities without selling off its inventory. It is also referred to as quick ratio and its only difference from the current ratio is that inventories are removed from the current assets. Mathematically, it is calculated as: Formula: A value of over 1 suggests that the firm is in a position to meet its liabilities. A large variation of the acid test ratio from the current ratio implies that the assets of the firm are strongly dependent on the inventory. Example Assets Liabilities Cash = 1000 Accounts payable = 500 Accounts receivable = 1000 Other short-term liabilities = 500 Inventory = 200 Current assets = 2200 Current Liabilities = 1000 Acid test ratio = (2200-200)/1000 = 2 Friends: (0)
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Rose Marry

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Re: Acid-test ratio - April 20th, 2016

Quote:
 Originally Posted by sayed123 what is acid-test ratio ?discuss acid-test ratio in detail?
Hey friend,

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