The acid-test ratio:
A)Measures liquidity.
B)Measures profitability.
C)Is also called the quick ratio.
D)Is also called the quick ratio and measures liquidity.
E)All of these answers are correct.

Question

Quizplus · Accepted Answer

The acid-test ratio is also called the quick ratio and it measures liquidity. Therefore, option D is the correct answer. Option A and B are incorrect because the acid-test ratio does not measure profitability. Option C is not the best choice because it only provides the alternative name for the acid-test ratio without explaining what it measures.

The Acid-Test Ratio