What is Quick Ratio?

Answer:

Ø  A measure of a company's liquidity and ability to meet its obligations. Quick ratio, often referred to as acid-test ratio,

                                               

Acid-Test (Quick) Ratio = Total Current Assets – Stock/Total Current Liabilities

                                 

 In general, a quick ratio of 1 or more is accepted by most creditors.

What is Acid Test Ratio?

Answer:

Acid Test Ratio is the  Ratio of liquid assets(that is current assets less stocks) to current liabilities , giving an indication towards solvency of a company. This ratio arises from the basic desire to measure a business ability to meet its current obligations through the use of its current assets as does the current ration. Acid-Test ratio is also called the “Quick Ratio”.