Acid test ratio – Quick ratio

The Acid Test Ratio (or Quick Ratio) is a common measure for the capacity of a business to meet short term commitments.

[current assets – (stock + work in progress)] / [current liabilities][Cash + Accounts receivables + Short term investments] / [current liabilities]Hence, a quick ratio of 1,00 means that 1 EUR of assets is available to cover 1 EUR of liabilities. A quick ratio of 0,50 for instance is not as good.

Updated 1/3/2016

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