Quick (Acid) Test
(Current Assets – Inventories)/Current Liabilities
This is similar to the current ratio, with the only exception of netting out inventories from current assets. Inventories are excluded as they sometimes can be illiquid, that is, hard to convert into cash.
Get Crash Course in Accounting and Financial Statement Analysis, Second Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
