Acid Test

Business, Legal & Accounting Glossary

Definition: 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.


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https://payrollheaven.com/define/acid-test/
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Acid Test. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 27, 2021 https://payrollheaven.com/define/acid-test/.
Chicago Manual of Style (CMS):
Acid Test. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/acid-test/ (accessed: September 27, 2021).
American Psychological Association (APA):
Acid Test. PayrollHeaven.com. Retrieved September 27, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/acid-test/

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 | 1 Views.