Acid Test

Business, Legal & Accounting Glossary

Definition: Acid Test

Acid Test

What is the dictionary definition of Acid Test?

Dictionary Definition

A financial ratio which is similar to the current ratio, but more stringent. It is defined as:

  • current assets minus stocks divided by current liabilities

and it shows whether a company would be able to pay its debts if it needed to satisfy creditors but it had no time to sell any of its assets.

If the acid test is 1 or higher, a company passes the test.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Acid Test. Payroll & Accounting Heaven Ltd.
August 12, 2022
Chicago Manual of Style (CMS):
Acid Test. Payroll & Accounting Heaven Ltd. (accessed: August 12, 2022).
American Psychological Association (APA):
Acid Test. Retrieved August 12, 2022
, from website:

Definition Sources

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

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

This glossary post was last updated: 26th April, 2020 | 0 Views.