Quick assets divided by current liabilities is equal to the:
A)Acid-test ratio.
B)Current ratio.
C)Working capital ratio.
D)Current liability turnover ratio.
E)Quick asset turnover ratio.

Question

Quizplus · Accepted Answer

Quick assets are those that can be easily converted to cash, such as cash, marketable securities, and accounts receivable. The acid-test ratio, also known as the quick ratio, measures the company's ability to meet its short-term liabilities with its most liquid assets. The formula for the acid-test ratio is quick assets divided by current liabilities. Therefore, quick assets divided by current liabilities is equal to the acid-test ratio.

Quick Assets Divided by Current Liabilities Is Equal to The