An acid test (quick)ratio of 0.75 to 1 would indicate:
A)a ratio that would not allow a company to pay off all current liabilities with quick assets.
B)for every $1 of short-term debt there is $0.75 of quick assets to meet short-term obligations.
C)for every $1 of current assets there is $0.75 of short-term debt.
D)Both A and B are correct.

Question

Quizplus · Accepted Answer

The acid test (quick) ratio of 0.75 to 1 indicates that for every $1 of short-term debt, there are only $0.75 of quick assets available to meet short-term obligations, which means the company would not be able to pay off all current liabilities with its quick assets. Both A and B correctly describe this situation.

An Acid Test (Quick)ratio of 0