The acid-test ratio is a measure of a company's immediate liquidity and includes only liquid assets that can be quickly converted to cash.

Question

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The acid-test ratio, also known as the quick ratio, includes only the most liquid assets such as cash, marketable securities, and accounts receivable that can be quickly converted to cash. It is a more conservative measure of liquidity than the current ratio, which includes all current assets.

The Acid-Test Ratio Is a Measure of a Company's Immediate