Acid Test Ratio Calculator

✖Cash is the money or currency that can be accessed immediately.ⓘ Cash [C]			+10% -10%
✖Accounts Receivable is the money owed to a company by providing the services.ⓘ Accounts Receivable [AR]			+10% -10%
✖Short Term Investments is the account in the current assets section of a company balance sheet.ⓘ Short Term Investments [STI]			+10% -10%
✖Current Liabilities are the company debts or obligations that are due within one year.ⓘ Current Liabilities [CL]			+10% -10%

✖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 [ATR]

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Formula

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Acid Test Ratio

Formula

`"ATR" = ("C"+"AR"+"STI")/"CL"`

Example

`"2"=("1000"+"2000"+"3000")/"3000"`

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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 5 Variables

Variables Used

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.
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 00.004 seconds)

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Created by Team Softusvista

Softusvista Office (Pune), India

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Verified by Himanshi Sharma

Bhilai Institute of Technology (BIT), Raipur

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< 22 Business Calculators

Macaulay Duration

Go Macaulay Duration = sum(x,1,5,Cash Flow Number,((Cash Flow/(1+Yield to Maturity (YTM)/Compounding Periods))^Cash Flow Number))*(Time in Years/Present Value)

Weighted Average Cost of Capital

Go Weighted average cost of capital = ((Market value of the firm’s equity/Firm Value)*Cost of Equity)+(((Market Value of the Firm’s Debt/Firm Value)*Cost of Debt)*(1-Corporate Tax Rate))

Total Inventory Cost

Go Total Inventory Cost = Carrying cost per unit per year*(Quantity of Each Order/2)+Fixed cost per order*(Demand in units per year/Quantity of Each Order)

Acid Test Ratio

Go Acid Test Ratio = (Cash+Accounts Receivable+Short Term Investments)/Current Liabilities

Economic Order Quantity

Go Economic Order Quantity = ((2*Fixed cost per order*Demand in units per year)/Carrying cost per unit per year)*(1/2)

Return on Capital Employed

Go Return on capital employed = (Earnings Before Interest and Taxes/(Total Assets-Current Liabilities))*100

Diluted Earnings per Share

Go Diluted Earnings per Share = Net Income/(Average Shares+Other Convertible Securities)

Inventory Shrinkage

Go Inventory Shrinkage = ((Recorded Inventory-Actual Inventory)/Recorded Inventory)*100

Modified Duration

Go Modified Duration = Macaulay Duration/(1+Yield to Maturity (YTM)/Coupon Periods)

Target Inventory Investment

Go Target Inventory Investment = Projected Annual Cost of Goods Sold from Stock Sales/Target Inventory Turnover

Retention Ratio

Go Retention Ratio = (Net Income-Dividend)/Net Income

Contribution Margin per Unit

Go Contribution Margin per Unit = Sales Price per Unit-Variable Cost per Unit

Operating Expense Ratio

Go Operating Expense Ratio = (Operating Expense/Gross Operating Income)*100

Break-Even Point

Go Break Even Point = Fixed Costs/Contribution Margin per Unit

Estimated Earnings

Go Estimated Earnings = Forecasted Sales-Forecasted Expense

Debt Coverage Ratio

Go Debt Coverage Ratio = Net Operating Income/Debt Service

Dividends Per Share

Go Dividends Per Share = Total Dividends/Number of Shares

Solvency Ratio

Go Solvency Ratio = (Shareholders Fund*100)/Total Assets

Estimate at completion

Go Estimate at Completion = Actual Cost+Bottom up ETC

Percentage off

Go Percentage Off = 1-(Selling Price/Original Price)

Preferred Stock

Go Preferred Stock = Dividend/Discount Percentage

Days in Inventory

Go Days in Inventory = 365/Inventory Turnover

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 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) & 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 & 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) & Current Liabilities (CL). With our tool, you need to enter the respective value for Cash, Accounts Receivable, Short Term Investments & 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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