Business, Legal & Accounting Glossary
A financial ratio which is similar to the current ratio, but more stringent. It is defined as:
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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This glossary post was last updated: 26th April, 2020 | 1 Views.