The Acid Test ratio is a key balance sheet liquidity ratio that helps you estimate how well a company can handle a credit crunch. The acid test ratio is a balance sheet-based financial measure ...

The worst news investors can get is that a company whose stock they own has gone bankrupt. As cataclysmic as bankruptcy can be, there are usually warning signs that astute investors can look for ...

The ability of a company to convert short-term assets into cash is one of the primary concerns of financial managers because liquidity problems can have a big impact on operational efficiency and ...

The quick ratio, often referred to as the acid-test ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory. It's calculated as (cash + ...

A stringent measure of a company’s ability to cover its immediate debts and obligations with its short-term assets. It is calculated by adding together cash and accounts receivable and short-term ...

As a contrast, less stringent ratios include short-term assets like inventories -- products and materials the company could sell or plans to sell, but hasn't sold. Those are tougher to convert to cash ...