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The acid-test ratio measures the company’s ability to meet its short-term obligations with quick assets. It is also called as Quick Ratio.

$$\begin{gathered} \mathbf{Acid}\mathbf{-}\mathbf{Test} \mathbf{Ratio}\mathbf{=}\frac{\mathbf{Cash}  \mathbf{Including}  \mathbf{Cash}  \mathbf{Equivalents}\mathbf{+} \mathbf{Short}\mathbf{-}\mathbf{term}  \mathbf{Investments}\mathbf{+}\mathbf{Net}  \mathbf{Current}  \mathbf{Receivables}}{\mathbf{AccountsPayable}\mathbf{+}\mathbf{OtherCurrentLiabilities}} \\ \mathbf{=}\frac{\mathbf{\$}\mathbf{573}\mathbf{,}\mathbf{720}\mathbf{+}\mathbf{\$}\mathbf{148}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{\$}\mathbf{11}\mathbf{,}\mathbf{000}}{\mathbf{\$}\mathbf{328}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{\$}\mathbf{188}\mathbf{,}\mathbf{000}} \\ \mathbf{=}\mathbf{1}\mathbf{.}\mathbf{42} \end{gathered}$$

$$\begin{gathered} \mathbf{Accounts}  \mathbf{Receivable}  \mathbf{Turnover}  \mathbf{Ratio}\mathbf{=}\frac{\mathbf{Net}  \mathbf{Credit}  \mathbf{Sales}}{\mathbf{Average}  \mathbf{Net}  \mathbf{Accounts}  \mathbf{Receivables}} \\ \mathbf{=}\frac{\mathbf{\$}\mathbf{3}\mathbf{,}\mathbf{212}\mathbf{,}\mathbf{000}}{\left(\frac{\mathbf{\$}\mathbf{11}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{\$}\mathbf{165}\mathbf{,}\mathbf{000}}{\mathbf{2}}\right)} \\ \mathbf{=}\mathbf{36}\mathbf{.}\mathbf{5} \mathbf{times} \end{gathered}$$

$$\begin{gathered} \mathbf{Day}\mathbf{\text{'}}\mathbf{s}  \mathbf{Sales}  \mathbf{Receivables}\mathbf{=}\frac{\mathbf{365}  \mathbf{Days}}{\mathbf{Accounts}  \mathbf{Receivable}  \mathbf{Turnover}  \mathbf{Ratio}} \\ \mathbf{=}\frac{\mathbf{365}}{\mathbf{36}\mathbf{.}\mathbf{5}} \\ \mathbf{=}\mathbf{10}  \mathbf{Days} \end{gathered}$$

1. Acid-test ratio is strong, as it exceeds 1, which is good.
2. Accounts receivable turnover ratio is strong.
3. Day’s sales in receivables is strong, as business is able to collect cash in 10 days which is less than 30 days credit terms.