The ________ ratio helps determine the ability of a firm to repay its short-term debts even if it has difficulty selling its inventory.
A) acid-test
B) cash flow
C) diluted current asset
D) required reserve

Question

Quizplus · Accepted Answer

The acid test ratio eliminates the inventory account from the current ratio. Acid test ratio = Cash + Accounts receivable = Marketable securities/Current liabilities.

The ________ Ratio Helps Determine the Ability of a Firm