The acid-test ratio is usually greater than the current ratio.

Name: The acid-test ratio is usually greater than the current ratio.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, only includes the most liquid current assets (such as cash, marketable securities, and accounts receivable) in its calculation, while excluding inventory and prepaid expenses. Therefore, the acid-test ratio is generally lower than the current ratio, which includes all current assets in its calculation.

The Acid-Test Ratio Is Usually Greater Than the Current Ratio