Does the acid test ratio deduct stock from current assets?
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forrest
Apprentice
Joined: 08 Sep 2006
Posts: 5
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 Posted: 09/04/08 - 07:46 Post subject: |
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| I have heard that the acid test ratio is some test that needs to be passed to test whether a company is financial viable or not. Do you know more about this acid test ratio? What I am now trying to find out is whether the acid test ratio actually deducts stock from the current assets? |
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agnola
Apprentice
Joined: 01 Aug 2007
Posts: 7
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| Posted: 10/03/08 - 22:43 Post subject: |
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| What the acid test ratio is test the financial possibilities of a business by determining whether it has sufficient short term assets in order to cover the immediate liabilities the business has. That is, without having to rely on the sale of inventory. This is a good and accurate test that says much about the state of affairs within a business. |
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