The Acid Test Ratio Calculator is used to calculate the acid test ratio.
Acid Test Ratio Definition
Acid test ratio is a stringent test that indicates whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. Generally, the acid test ratio should be 1:1 or higher; however, this varies widely by industry.
Acid Test Ratio Formula
The acid test ratio calculation formula is as follows:
Acid Test Ratio = (Cash + Accounts Receivable + Short-term Investments) / Current Liabilities