Acid-test ratio

Acid test - ratio or Quick ratio

The quick ratio, also called the acid test ratio, compares current assets and current liabilities similarly to the current ratio. The quick ratio removes inventory because it is typically the least liquid asset for a corporation and losses typically arise when selling such assets, which is the primary distinction between these two ratios. Short-term prepayments made by the business are also not included in this computation (Brigham, Houston 2007). Template:Acid test ration