The Acid-test Ratio Differs From the Current Ratio in That:
We continue our finance KPI examples with the quick ratio. The higher your current ratio the more capable you are of paying your bills in the short-term.
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. This metric takes into account just the. The quick ratio also known as the acid test ratio measures the ability of the company to repay the short-term debts with the help of the most liquid assetsIt is calculated by adding total cash and equivalents accounts receivable and the marketable investments of the company and then dividing it by its total current liabilities. Banks often recommend a current ratio higher than 2.
QUICK RATIO ACID TEST Is your companys liquidity healthy.
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