Difference between revisions of "Acid test ratio"

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==Definitions==
 
==Definitions==
 
According to [[College Accounting: A Practical Approach by Slater (13th edition)‎]],
 
According to [[College Accounting: A Practical Approach by Slater (13th edition)‎]],
:[[Acid test ratio]]. A liquidity ratio; those assets that are most easily converted to cash are divided by current liabilities to indicate ability to pay off short-term debt. Also called [[quick ratio]].
+
:[[Acid test ratio]]. A [[liquidity ratio]]; those assets that are most easily converted to cash are divided by current liabilities to indicate ability to pay off short-term debt. Also called [[quick ratio]].
 
According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]],
 
According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]],
 
:[[acid test ratio|Quick ratio]] ([[Quick ratio|acid test ratio]]). Found by taking current assets less inventories and then dividing by current liabilities.
 
:[[acid test ratio|Quick ratio]] ([[Quick ratio|acid test ratio]]). Found by taking current assets less inventories and then dividing by current liabilities.

Revision as of 18:12, 1 November 2019

Acid test ratio (alternatively called quick ratio) is a liquidity ratio; those assets that are most easily converted to cash are divided by current liabilities to indicate ability to pay off short-term debt.


Definitions

According to College Accounting: A Practical Approach by Slater (13th edition)‎,

Acid test ratio. A liquidity ratio; those assets that are most easily converted to cash are divided by current liabilities to indicate ability to pay off short-term debt. Also called quick ratio.

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Quick ratio (acid test ratio). Found by taking current assets less inventories and then dividing by current liabilities.

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Quick ratio (acid test ratio). This ratio is calculated by deducting inventories from current assets and then dividing the remainder by current liabilities.

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