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Brody Arrington
on Oct 09, 2024

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If the acid-test ratio is less than one, then paying off some current liabilities with cash will increase the acid-test (quick)ratio.

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its most liquid assets, excluding inventory.

Current Liabilities

Short-term financial obligations that are due within one year or within a company's operating cycle, whichever is longer.

  • Gain an understanding of liquidity principles and the effects of transactions thereon.
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Anthony GiannopoulosOct 16, 2024
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