Which statement is true concerning the current ratio?
A)It is usually a larger amount than the acid-test ratio.
B)It is a more stringent test of a company's ability to pay its short-term obligations.
C)It measures a company's ability to manage its assets efficiently.
D)It measures a company's ability to make interest payments on debt.

Question

Quizplus · Accepted Answer

The current ratio includes all current assets, while the acid-test ratio only includes the most liquid assets. Therefore, the current ratio is usually a larger amount than the acid-test ratio as it includes less liquid assets.

Which Statement Is True Concerning the Current Ratio