Business

# Acid Test Ratio Calculator

Luis Anaya

Jan 15 2021

The ratio of current assets less stocks to current liabilities. This ratio is an excellent measure of how well a company can cover its short-term as we are only dealing with current assets which can be turned into cash immediately.

The ratio tells us how much of the company's short term debt can be met. A ratio of less than one means a company will struggle to meet its immediate obligations, whilst a value over 2.0 generally indicates no short-term trading problem - this ratio is salso called acid-test ratio.

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