President Trump didn't exactly boot Steve Bannon from his ruling circle of relatives and Wall Street hotshots he might like to have as relatives. True, he threw Bannon off the National Security Council in an abrupt manner. And he piled further indignity on the self-proclaimed architect of hiâ¦ Read more.
What is the 'Acid-Test Ratio'. The acid-test ratio is a strong indicator of whether a firm has sufficient short-term assets to cover its immediate liabilities. Commonly known as the quick ratio, this metric is more robust than the current ratio, also known as the working capital ratio, since it ignores illiquid assets such as inventory. Calculated by:
The difference between current ratio and quick ratio is that the former includes inventory in its equation, while the latter does not. Current ratio measures the liquidity of a company by dividing the current assets by the current liabilities. The quick ratio does essentially the same thing, but can be used when the inventory attached to the company is of a variable value. Assessing the long-term value of inventory can help an analyst when deciding between current ratio and quick ratio as a means of determining company liquidity.