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Acid Test Ratio Solution

STEP 0: Pre-Calculation Summary
Formula Used
acid_test_ratio = (Cash+Accounts Receivable+Short Term Investments)/Current Liabilities
ATR = (C+AR+STI)/CL
This formula uses 4 Variables
Variables Used
Cash- Cash is the money or currency that can be accessed immediately.
Accounts Receivable- Accounts Receivable is the money owed to a company by providing the services.
Short Term Investments- Short Term Investments is the account in the current assets section of a company balance sheet.
Current Liabilities- Current Liabilities are the company debts or obligations that are due within one year.
STEP 1: Convert Input(s) to Base Unit
Cash: 1000 --> No Conversion Required
Accounts Receivable: 2000 --> No Conversion Required
Short Term Investments: 3000 --> No Conversion Required
Current Liabilities: 3000 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
ATR = (C+AR+STI)/CL --> (1000+2000+3000)/3000
Evaluating ... ...
ATR = 2
STEP 3: Convert Result to Output's Unit
2 --> No Conversion Required
FINAL ANSWER
2 <-- Acid Test Ratio
(Calculation completed in 00.016 seconds)
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Acid Test Ratio Formula

acid_test_ratio = (Cash+Accounts Receivable+Short Term Investments)/Current Liabilities
ATR = (C+AR+STI)/CL

How to Calculate Acid Test Ratio?

Acid Test Ratio calculator uses acid_test_ratio = (Cash+Accounts Receivable+Short Term Investments)/Current Liabilities to calculate the Acid Test Ratio, The acid test ratio is a strong indicator of whether a firm has sufficient short-term assets to cover its immediate liabilities. Acid Test Ratio and is denoted by ATR symbol.

How to calculate Acid Test Ratio using this online calculator? To use this online calculator for Acid Test Ratio, enter Cash (C), Accounts Receivable (AR), Short Term Investments (STI) and Current Liabilities (CL) and hit the calculate button. Here is how the Acid Test Ratio calculation can be explained with given input values -> 2 = (1000+2000+3000)/3000.

FAQ

What is Acid Test Ratio?
The acid test ratio is a strong indicator of whether a firm has sufficient short-term assets to cover its immediate liabilities and is represented as ATR = (C+AR+STI)/CL or acid_test_ratio = (Cash+Accounts Receivable+Short Term Investments)/Current Liabilities. Cash is the money or currency that can be accessed immediately, Accounts Receivable is the money owed to a company by providing the services, Short Term Investments is the account in the current assets section of a company balance sheet and Current Liabilities are the company debts or obligations that are due within one year.
How to calculate Acid Test Ratio?
The acid test ratio is a strong indicator of whether a firm has sufficient short-term assets to cover its immediate liabilities is calculated using acid_test_ratio = (Cash+Accounts Receivable+Short Term Investments)/Current Liabilities. To calculate Acid Test Ratio, you need Cash (C), Accounts Receivable (AR), Short Term Investments (STI) and Current Liabilities (CL). With our tool, you need to enter the respective value for Cash, Accounts Receivable, Short Term Investments and Current Liabilities and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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