Define: Acid Test Ratio

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Definition: Acid Test Ratio

Quick Summary of Acid Test Ratio

The ratio of liquid assets to current liabilities.

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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. February 29, 2020 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: February 29, 2020).
American Psychological Association (APA):
Acid Test Ratio. PayrollHeaven.com. Retrieved February 29, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/acid-test-ratio/

Definition Sources

Definitions for Acid Test Ratio are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

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