The acid test ratio is a balance sheet-based financial measure designed to help you judge how well a company can cover its short-term obligations. It is considered a stringent measure of the company's ...

The first liquidity ratio we examined in digesting Axel Tracy's book, "Ratio Analysis Fundamentals: How 17 Financial Ratios Can Allow You to Analyse Any Business on the Planet," was the current ratio.

The quick ratio, also known as the acid-test ratio, measures a company's ability to pay off its current debt. Current debt includes any liabilities coming due within a year, like accounts payable and ...

The acid-test ratio (which is sometimes called the quick ratio) compares short-term assets with short-term liabilities to see if a company has enough cash on hand to cover payments due. The acid-test ...