;he ____ ratio, sometimes called the "acid test," is a more stringent measure of ____ than the current ratio.
A) quick; liquidity
B) fixed-asset turnover; activity
C) net profit margin; gross profit margin
D) equity; activity

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid test ratio, is a more stringent measure of liquidity than the current ratio, as it only considers a company's most liquid assets (cash, marketable securities, and accounts receivable) to pay off current liabilities. The fixed-asset turnover ratio measures a company's ability to generate sales from its fixed assets, the net profit margin measures a company's profitability, and equity ratio measures a company's financial leverage.

;He ____ Ratio, Sometimes Called the "Acid Test," Is a More