Municipalities throughout the country recorded the

acid test ratio of 1,1:1 during the two financial years ended 30 June 2014 and 30 June 2015.

It was desired to measure the liquidity of corporations by using current ratio (%), acid test ratio and cash ratio (%).

* Acid Test Ratio: It shows the ability to pay short-term liabilities with current assets but without inventories.

The ten ratios that were used for conducting firm performance analysis included Acid Test Ratio, Financial Expenses as Percent of Sales Ratio, Current Ratio, Debt to Equity Ratio, Return on Assets Ratio, Return on Equity Ratio, Dividend Cover Ratio, Net Profit Margin Ratio, Earnings per Share after Tax Ratio, and Break-Up Value Shares Ratio.

Predictors: (Constant), Break/up value shares, Debt/ Equity ratio, Acid test Ratio, ROE, Fin Exp of sales, EPS, Current ratio, NPM, ROA b.

where Z is discriminant score (Z-score); EPS is earning per share; DR is total liability to total assets (debt ratio); ROE is return on equity (return on shareholders' equity); QR is

acid test ratio (quick ratio); PBTP is profit before tax to paid-in capital (return on capital); ROA is return on assets (Return on total assets); OP is operating profit; OEOI is operating expense to operating income.

Acid test ratio = Current assets--Inventory/Current liabilities (Elliott, B., Elliott, J.

At first glance, the world's largest company's

acid test ratio of 0.2 looks a lot like its prices -- improbably low.

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averages averages Current ratio 1.2 1.4 1.5

Acid test ratio .8 1.1 1.1 Debt/equity ratio 1.1 1.5 1.9 Receivables age 55 days 42 days 57 days Inventory age 73 days 50 days 48 days Working capital/revenues 8% 8.5% 9.7%

Frequently used are the current ratio (current assets divided by current liabilities) and the quick or

acid test ratio (quick assets, such as cash, A/R and marketable securities divided by current liabilities).

It is reasonable to set specific

acid test ratio objectives and regularly monitor the cash position with this simple calculation.