[Current Assets (Less Inventory & Prepaid Expenses) ] / Current liabilities = ___________

Name: [Current Assets (Less Inventory & Prepaid Expenses) ] / Current liabilities = ___________
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Question

Quizplus · Accepted Answer

The calculation given is for the acid-test ratio, which measures a company's ability to pay off its current liabilities with its most liquid assets (i.e. those that can be easily converted to cash). The formula for the acid-test ratio is (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities.