Acid Test Ratio Calculator
Acid Test Ratio calculator measures a company's short-term liquidity, the ability to use its immediate assets to pay its current liabilities. Acid Test Ratio formula is:
Acid Test Ratio calculator is part of the Online financial ratios calculators, complements of our consulting team.
- Complementarily, in order to calculate the Acid Test Ratio for your business, we offer a calculator free of charge.
You may link to this calculator from your website as long as you give proper credit to C. C. D. Consultants Inc. and there exists a visible link to our website.
To link to our Acid Test Ratio Calculator from your website or blog, just copy the following html code:
<a href="http://www.ccdconsultants.com/calculators/financial-ratios/acid-test-ratio-calculator-and-interpretation">Acid Test Ratio Calculator and Interpretation</a>
- Although C. C. D. Consultants Inc.'s personnel has verified and validated the Acid Test Ratio calculator, C. C. D. Consultants Inc. is not responsible for any outcome derived from its use. The use of Acid Test Ratio calculator is the sole responsibility of the user and the outcome is not meant to be used for legal, tax, or investment advice.
Definitions and terms used in Acid Test Ratio Calculator
- Refers to money in the physical form of currency. Cash includes money in the cash pan, petty cash, cash in the locker, bank account and customers' checks.
- Marketable Securities
- A near-cash (liquid) assets in the form of equity or debt instrument (share/stock, bond or note) that are listed on an exchange and can be readily bought or sold.
- Current Liabilities (short term debt)
- Obligations or debts that are due within one fiscal year or the operating cycle. For example, accounts payable, accrued liabilities, dividends, unpaid taxes and other debts that are due within one year.
What is Acid Test Ratio
Acid Test Ratio is an indicator of company's short-term liquidity. It measures the ability to use its immediate assets (cash, cash equivalents and marketable securities) to pay its current liabilities.
Acid Test ratio formula is:
Acid Test Ratio Analysis
An Acid test ratio of 0.75:1 or greater is preferred.
Acid test ratio is a more conservative look at a company's liquidity because is taking in the consideration only the most liquid assets (cash and marketable securities).
Acid test ratio measures to which extend financial obligations can be liquidated immediately, because it eliminates any unknowns surrounding receivables.
© 2009 - 2015 C. C. D. Consultants Inc.