Acid Test

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Definition: Acid Test

Acid Test
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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

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https://payrollheaven.com/define/acid-test/
Modern Language Association (MLA):
Acid Test. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
May 18, 2024 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: May 18, 2024).
American Psychological Association (APA):
Acid Test. PayrollHeaven.com. Retrieved May 18, 2024
, 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 | 0 Views.