Become a Financial Modeling & Valuation Analyst (FMVA)®. Enroll today to advance your career!
Login to your new FMVA dashboard today!

Acid Test Ratio Template

Acid Test Ratio Template

This Acid Test Ratio Template will show you how to calculate the acid test ratio the formula: (Current Assets – Inventory) / Current Liabilities.

Here is a preview of the template:

Acid Test Ratio Template Screenshot

Download the Free Template

Enter your name and email in the form below and download the free template now!

Acid Test Ratio Template

Download the free Excel template now to advance your finance knowledge!

What is the Acid-Test Ratio?

The Acid-Test Ratio, also known as the quick ratio, is a liquidity ratio that measures how sufficient a company’s short-term assets are to cover its current liabilities. In other words, the acid-test ratio is a measure of how well a company can satisfy its short-term (current) financial obligations. This guide will break down how to calculate the ratio step by step, and discuss its implications.

The acid-test ratio is used to indicate a company’s ability to pay off its current liabilities without relying on the sale of inventory or on obtaining additional financing. Inventory is not included in calculating the ratio, as it is not ordinarily an asset that can be easily and quickly converted into cash. Compared to the current ratio – a liquidity or debt ratio which does include inventory value in the calculation – the acid-test ratio is considered a more conservative estimation of a company’s financial health.

 

More Free Templates

For more resources, check out our business templates library to download numerous free Excel modeling, PowerPoint presentation and Word document templates.

  • Excel Modeling Templates
  • PowerPoint Presentation Templates
  • Transaction Document Templates

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!