Today, the assessment of liver function in patients suffering from acute or chronic liver disease is based on liver biopsy and blood tests including synthetic function, liver enzymes and viral load, most of which provide only circumstantial evidence as to the degree of hepatic impairment. Most of these tests lack the degree of sensitivity to be useful for follow-up of these patients at the frequency that is needed for decision making in clinical hepatology. Accurate assessment of liver function is essential to determine both short- and long-term prognosis, and for making decisions about liver and non-liver surgery, TIPS, chemoembolization or radiofrequency ablation in patients with chronic liver disease. Liver function tests can serve as the basis for accurate decision-making regarding the need for liver transplantation in the setting of acute failure or in patients with chronic liver disease. The liver metabolic breath test relies on measuring exhaled 13C tagged methacetin, which is metabolized only by the liver. Measuring this liver-specific substrate by means of molecular correlation spectroscopy is a rapid, non-invasive method for assessing liver function at the point-of-care. The 13C methacetin breath test (MBT) is a powerful tool to aid clinical hepatologists in bedside decision-making. Our recent findings regarding the ability of point-of-care 13C MBT to assess the hepatic functional reserve in patients with acute and chronic liver disease are reviewed along with suggested treatment algorithms for common liver disorders.