Define: Acid Test Ratio

UK Accounting Glossary

Definition: Acid Test Ratio


Quick Summary of Acid Test Ratio


The ratio of liquid assets to current liabilities.



What is the dictionary definition of Acid Test Ratio?

Dictionary Definition



Full Definition of Acid Test Ratio



Examples of Acid Test Ratio in a sentence


The larger the acid-test ratio, the better able the business is to pay its current liabilities.
In general, an acid-test ratio of 1.00 is considered safe.
The acid-test ratio assumes that all current liabilities are payable immediately and that the debtor will convert the most liquid assets to cash.


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https://payrollheaven.com/define/acid-test-ratio/
Modern Language Association (MLA):
Acid Test Ratio. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. August 24, 2019 https://payrollheaven.com/define/acid-test-ratio/.
Chicago Manual of Style (CMS):
Acid Test Ratio. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/acid-test-ratio/ (accessed: August 24, 2019).
American Psychological Association (APA):
Acid Test Ratio. PayrollHeaven.com. Retrieved August 24, 2019, from PayrollHeaven.com website: https://payrollheaven.com/define/acid-test-ratio/

Definition Sources


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This glossary post was last updated: 23rd December 2018.