An acid test is a business’s short-term assets minus accounts receivable and inventory, divided by short-term liabilities.

This is a test of a company’s ability to meet its immediate cash requirements. It is one of the more common business ratios used by financial analysts.

To learn more about how to manage your cash, check out our Cash Flow 101.

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At Bplans, it's our goal to make it easy for you to start and run your business. The Bplans glossary of common business terms will help you learn about key small business and entrepreneurship topics.