Acid Test
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| A stern measure of a company's ability to pay its short term debts, in that stock is excluded from asset value. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets. | ||
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Additional Comments:
Usually an acid test ratio of 1.0 or higher is considered satisfactory by lenders and investors. Also referred to as the Quick Ratio.
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Related Terms: | ||
Growth Stocks Growth stocks are issued by companies expected to have sustained high rates of growth in sales ... Ratio Spreads Ratio spreads are an evolution of the bull call or bear put spread. They combine long ... Ratio Put Spread A bullish strategy that involves the trader being short in more, lower Strike puts than those ... | ||
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