Acid Test Ratio

Acid Test ratio is also known as Quick ratio since it deemed only the quick assets which are more liquid. Inventory is not considered as part of quick assets since it’s can’t be converted speedily into cash. Total current liabilities calculated by the ratio of current assets , minus inventories, . This ratio shows how well a company is covering its short-term obligations

(Cash + Accounts Receivable + Short-term Investments)
Current Liabilities

The acid test ratio represents an in-depth accounting of a company to sufficiently manage the outstanding liabilities currently held by the corporation,generally an acid test ratio of 1.0 or higher is considered satisfactory by lenders and investors, Note; (this site give free stock trading calls for investor in indian stock markae )

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