The acid-test ratio is calculated as:
A) (total current liabilities)/(total current assets)
B) (cash + short-term investments + net current receivables)/(total current liabilities)
C) (cash + short-term investments + net current receivables)/(total current assets)
D) (total current assets)/(total current liabilities)

Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, measures a company's ability to meet its short-term financial obligations using only its most liquid assets. It is calculated by dividing the sum of cash, short-term investments, and net current receivables by total current liabilities. This ratio provides a more stringent assessment of a company's liquidity than the current ratio, which includes all current assets.

The Acid-Test Ratio Is Calculated As