The acid-test ratio is a financial metric that assesses a company’s ability to cover short-term liabilities with its most liquid assets. A higher acid-test ratio suggests a stronger liquidity position ...

The quick ratio, also known as the acid-test ratio, measures a company's ability to pay off its current debt. Current debt includes any liabilities coming due within a year, like accounts payable and ...

The Acid Test ratio is a key balance sheet liquidity ratio that helps you estimate how well a company can handle a credit crunch. The acid test ratio is a balance sheet-based financial measure ...

The worst news investors can get is that a company whose stock they own has gone bankrupt. As cataclysmic as bankruptcy can be, there are usually warning signs that astute investors can look for ...

There’s no universal safe or danger level. Ideal current ratios vary by industry. A current ratio of 1.0 means the company has $1 in current assets for every $1 in current liabilities. A ratio below 1 ...

When you’re evaluating a potential investment, you likely look at profitability and growth, but there is one fundamental concept you must master first: liquidity. Just as a household needs enough cash ...

A quick ratio below industry standard means that your company has a relatively lower liquidity position than its competitors on one of the three common liquidity ratios used by companies. The quick ...

A liquidity ratio that measures a company’s ability to meet its current obligations by removing inventory from a company’s current assets. This ratio reflects the illiquidity of inventory and is ...

As a contrast, less stringent ratios include short-term assets like inventories -- products and materials the company could sell or plans to sell, but hasn't sold. Those are tougher to convert to cash ...

A stringent measure of a company’s ability to cover its immediate debts and obligations with its short-term assets. It is calculated by adding together cash and accounts receivable and short-term ...