Which of the following is included in the numerator of the acid-test ratio?
A) Cash plus inventory
B) Accounts receivable and inventory
C) Cash, accounts receivable and short-term investments
D) All current assets

Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, includes only the most liquid current assets. These are cash, accounts receivable, and short-term investments. Inventory is not included because it may take time to convert to cash. Therefore, the numerator of the acid-test ratio consists of cash, accounts receivable, and short-term investments only.

Which of the Following Is Included in the Numerator of the Acid-Test