For all businesses, the desired acid-test ratio is _____.
A) 3.0
B) 1.0
C) 2.0
D) 0.1
E) 0.3

Question

Quizplus · Accepted Answer

The desired acid-test ratio for businesses is typically 1.0 or higher. This is because the acid-test ratio measures a company's ability to pay off its current liabilities with its most liquid assets, such as cash and marketable securities. A ratio of 1.0 or higher indicates that a company has enough of these highly liquid assets to cover all of its current liabilities, which is a good sign of financial health.

For All Businesses, the Desired Acid-Test Ratio Is _____