The current ratio instead uses total current assets, which includes additional items such as inventories that may not be as liquid. What Does the Acid Test Tell You? The acid test provides a back ...

The quick ratio ... a company does not necessarily have sufficient liquidity to handle its short-term liabilities. The quick ratio is also commonly referred to as the “acid test” ratio.

Businesses in industries like manufacturing or retail, where inventory turnover is slow, may show a strong current ratio but ...

An “acid test” is a ... As the quick ratio only wants to reflect the cash that could be on hand, the formula should not include any receivables that a company does not expect to receive.