According to Bankrate.com, the acid test ratio is commonly called the "quick ratio." The reason it is considered more accurate than the "current ratio" is that the quick ratio deducts inventory from the assets before computing the ratio, because inventory can sometimes be difficult to liquidate. Potential creditors like to use this ratio because it reveals a company's ability to pay off under the worst possible conditions.

http://www.bankrate.com/brm/news/biz/bizcalcs/ratioquick.asp


Fuad