If a company has an acid-test ratio significantly higher than the current ratio, it means that the company has a significant amount of inventory.

Question

Quizplus · Accepted Answer

The acid-test ratio excludes inventory from current assets, so if it is significantly higher than the current ratio, it suggests the company does not have a significant amount of inventory, as inventory would lower the acid-test ratio when compared to the current ratio.

If a Company Has an Acid-Test Ratio Significantly Higher Than