Financial ratio's - Liquidity
3 important questions on Financial ratio's - Liquidity
There are two ratios that are concerned with he ability of the business to meet its short-term obligations, what are the two ratios?
- Current ratio
- Acid test ratio
What does the acid test represent?
A more stringent test of liquidity.
What is the formula for the acid test ratio
Acid test ratio = current assets ( excluding inventories) / current liabilities.
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