Also known as: atr..
ATR stands for various terms. Discover the full forms, meanings, and possible interpretations of ATR across different fields and industries.
The Acid Test Ratio, often referred to as the quick ratio, is a financial metric used to assess a company's short-term liquidity position. It measures the ability of a company to meet its short-term obligations with its most liquid assets, excluding inventory from the calculation. This ratio is particularly useful in the banking sector for evaluating the financial health of businesses seeking loans or credit lines.
The calculation of the Acid Test Ratio involves subtracting inventory from current assets and then dividing the result by current liabilities. A ratio of 1 or higher is generally considered satisfactory, indicating that the company has enough liquid assets to cover its immediate liabilities. However, standards can vary by industry, making it essential for banking professionals to understand the context behind the numbers they analyze.
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