Which of the following is included in the numerator of the acid-test ratio?
A) cash including cash equivalents, inventory, short-term investments, net current receivables
B) accounts receivable and inventory
C) cash including cash equivalents, short-term investments, net current receivables
D) total current assets

Question

Quizplus · Accepted Answer

The acid-test ratio is calculated by dividing the sum of cash, short-term investments, and net current receivables by current liabilities. Therefore, the numerator includes only cash including cash equivalents, short-term investments, and net current receivables. Options A and B include inventory which is not included in the numerator of the acid-test ratio. Option D includes all current assets, including inventory which is not necessary for the calculation of this ratio.

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