Each of the following is included in computing the acid-test ratio except
A) cash.
B) inventory.
C) receivables.
D) short-term investments.

Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, is a measure of a company's ability to pay off its current liabilities using only its most liquid assets. Therefore, only assets that can be quickly converted to cash are included in the calculation. Cash, receivables, and short-term investments are all considered to be highly liquid assets and are included in the acid-test ratio. However, inventory is not considered to be as quickly liquidated and is therefore excluded from the calculation.

Each of the Following Is Included in Computing the Acid-Test