The acid-test ratio is most similar to the:
A)Current ratio.
B)Debt to equity ratio.
C)Times interest earned ratio.

Question

Quizplus · Accepted Answer

The acid-test ratio, also known as quick ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory. This is similar to the current ratio which also measures a company's ability to meet its short-term obligations. The debt to equity ratio and times interest earned ratio measure a company's leverage and ability to pay interest expenses, respectively, which are different from the acid-test ratio.

The Acid-Test Ratio Is Most Similar to The