The "Acid Test" is a financial metric used to evaluate a company's short-term liquidity. It measures a firm's ability to pay off its current liabilities without relying on the sale of inventory. The formula for the Acid Test ratio is (Current Assets - Inventory) / Current Liabilities. A ratio above 1 indicates that a company can cover its short-term obligations. Originally, the term "Acid Test" referred to a method used by miners to determine the purity of gold. In this context, an acid solution would dissolve base metals, leaving behind pure gold. This concept of testing purity has been adapted to finance to assess a company's financial health.