What is Acid Test Ratio?
The Acid Test Ratio Calculator measures a company's ability to pay short-term obligations using its most liquid assets. It excludes inventory from current assets, providing a strict assessment of liquidity. This quick ratio helps investors and creditors evaluate financial health without relying on inventory liquidation. A ratio above 1 indicates good short-term financial strength, while below 1 may signal potential liquidity issues.
Formula
Acid Test Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities
Calculator
Cash:
Marketable Securities:
Accounts Receivable:
Current Liabilities: