A ratio that measures the instant debt-paying ability of a company is called:

Question

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The acid-test or quick ratio is a liquidity ratio that measures the company's ability to pay off its current liabilities using only its most liquid assets such as cash, accounts receivable, and short-term investments. It is a more stringent measure of the firm's instant debt-paying ability compared to the current ratio, which includes inventories and prepaid expenses in the calculation. The higher the acid-test ratio, the better the company's short-term financial position.

A Ratio That Measures the Instant Debt-Paying Ability of a Company