acid-test ratio

acid-test ratio definition - finance
The ratio of current assets, minus inventories, to total current liabilities. This ratio shows how well a company is covering its short-term obligations. It also indicates how much of a companyÂ’s short-term debt could be paid off if the company sold its liquid assets.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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