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Definition

Acid test ratio

Acid test ratio is a measure of a firm’s ability to pay current debts from its most liquid, or quick, assets cash and near-cash items. (Found by dividing the sum of cash, accounts receivable, and marketable securities by current liabilities.)


Acid test ratio also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid items to current liabilities.

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