The term “Acid-test ratio” is also known as quick ratio. The most basic definition of acid-test ratio is that, “it measures current (short term) liquidity and position of the company”. To do the analysis accountants weight current assets of the company against the current liabilities whi...
A higher current ratio indicates a better ability to meet short-term obligations. Quick Ratio: Quick ratio, also known as acid-test ratio, is a liquidity ratio that measures a company’s ability to pay off its short-term liabilities using its most liquid assets. It is calculated by dividing...
Quick Ratio:Also known as the acid-test ratio, it measures a company’s ability to meet its short-term obligations with its most liquid assets, excluding inventories. It is calculated as: Quick Ratio = frac{Current Assets – Inventories}{Current Liabilities} Cash Ratio:This ratio focuses only ...
Current RatioThe current ratio, also known as the working capital ratio, measures the business’ ability to pay off its short-term debt obligations with its current assets.The formula for calculating the current ratio is as follows:Current Ratio = Current Assets / Current Liabilities...
The quick ratio is also known as the liquid Ratio or acid-test Ratio, which indicates the short-term paying capacity of the enterprise. This is the reason why the Ratio includes the liquid assets exclusively. One thing to note is that while calculating the acid test ratio, the current asset...
While the current ratio is also referred to as a liquidity ratio, a company with the majority of its current assets in inventory may or may not have the liquidity needed to pay its liabilities as they come due. Its liquidity depends on the speed in which the inventory can be converted to...
Quick ratio – Also known as the acid-test ratio, the quick ratio looks at whether you’re able to pay off your liabilities with quick assets, which are assets that you can convert to cash within the space of 90 days. As such, the quick ratio is a great indicator of short-term liqu...
Answer to: Which of the following is not a liquidity ratio? Select one: a. Current ratio b. Quick ratio c. Debt-to-equity ratio d. Interest...
The Quick Ratio Thequick ratiomeasures a company's ability to meet its short-term obligations with its most liquid assets and therefore excludes inventories from its current assets. It is also known as theacid-testratio: Quick ratio=C+MS+ARCLwhere:C=cash & cash equivalentsMS=marketable securit...
Thequick ratiomeasures a company’s ability to meet its short-term obligations with its most liquid assets and therefore excludes inventories from its current assets. It is also known as the “acid-test ratio.” Days Sales Outstanding (DSO) ...