The acid test ratio is a stricter measure than the current ratio regarding a company's ability to pay its current obligations as they are due.

Question

Quizplus · Accepted Answer

The acid test ratio (also known as quick ratio) takes into account only the most liquid current assets, such as cash, marketable securities, and accounts receivable. This makes it a more rigorous measure of a company's ability to meet short-term obligations than the current ratio, which includes all current assets in its calculation.

The Acid Test Ratio Is a Stricter Measure Than the Current