Liquidity (Acid Test) Ratio

AFM Ratio Analysis Free JAIIB Capsule 26 views Updated 20 Sep 2026

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A firm might have a satisfactory current ratio but still face liquidity issues if funds are tied up in inventory. How does the Liquidity (Acid Test) Ratio differ from the Current Ratio in assessing solvency?

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A firm might have a satisfactory current ratio but still face liquidity issues if funds are tied up in inventory. How does the Liquidity (Acid Test) Ratio differ from the Current Ratio in assessing solvency?

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