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What Is Meaning Of Acid Test Ratio? Find Out Meaning Of Acid Test Ratio.

Meaning Of Acid Test Ratio

Find Meaning Of Acid Test Ratio?

What Is Meaning Of Acid Test Ratio?

The Meaning Of Acid Test Ratio In English,

The term acid test ratio is also called the “Quick Ratio”. The acid test ratio or the quick ratio is a type of liquidity ratio which measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately.

Meaning Of Acid Test Ratio

In simpler words, the acid test ratio is a ratio between quickly available or liquid assets and current liabilities. A company that has less than 1 acid test ratio or quick ratio cannot currently fully pay back its current liabilities.

The normal liquid ratio is considered to be 1:1. This ratio is considered to be much better and reliable as a tool for assessment of the liquidity position of firms. This acid test ratio or quick ratio is calculated by the specific formula which is given as follows:

ACID TEST RATIO(Quick Ratio)=cash and cash equivalent+marketable securities+accounts receivable Current liabilities
Or it can be also written as
Quick ratio=Liquid assets
Quick liabilities

Ratios are the tests of viability for business entities but do not give a complete picture of the business’s health. The general acid test ratio or quick ratio is 1:1 or more than that. It depends on the industry. The greater the ratio the greater the company.

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What Are The Synonyms Of Acid Test Ratio?

Synonyms Of Acid Test Ratio Are:

  • Not Available The Synonyms Of Acid Test Ratio

What Are The Antonyms Of Acid Test Ratio?

Antonyms Of Acid Test Ratio Are:

  • Not Available The Antonyms Of Acid Test Ratio

What Are The Related Words Of Acid Test Ratio?

Related Words Of Acid Test Ratio Are:

  • Not Available The Related Words Of Acid Test Ratio

What Is The Noun Form Of Acid Test Ratio?

Noun Form Of Acid Test Ratio Is:

  • Not Available The Noun Form Of Acid Test Ratio

What Is The Verb Form Of Acid Test Ratio?

Verb Form Of Acid Test Ratio Is:

  • Not Available The Verb Form Of Acid Test Ratio

What Is The Adjective Of Acid Test Ratio?

Adjective Of Acid Test Ratio Is:

  • Not Available The Adjective Of Acid Test Ratio

 

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