Acid Test Ratio Calculator

About Acid Test Ratio Calculator

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

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