A financial ratio which will be much like the existing ratio, but more stringent. It really is defined as:current possessions minus stocks split by present liabilitiesand it reveals whether a business could spend its debts if it needed seriously to satisfy lenders but it had no time at all to sell any one of its possessions.If the acid test is 1 or higher, a company passes the test.
Many strict test associated with the reliability. So called because since ancient times acid is placed on assess the purity of a piece of silver (pure gold is unaffected by dilute acids).
a rigorous or vital assessment
He does not enquire into the abstract right and wrong of any case, but subjects it to the acid test of proletarian interests.