The quick ratio is also known as the
A)key profitability ratio.
B)acid test.
C)EPS.
D)asset turnover.
E)key activity ratio.

Question

Quizplus · Accepted Answer

The quick ratio is also known as the acid test, as it measures a company's ability to pay off its short-term liabilities using only its most liquid assets (cash, cash equivalents, and accounts receivable). It is a more stringent measure of liquidity than the current ratio, as it excludes inventory, which may not be easily converted into cash in the short term. The other answer choices (A, C, D, and E) refer to different ratios that focus on profitability, earnings per share, asset utilization, and activity levels, respectively, but they are not synonymous with the quick ratio.

The Quick Ratio Is Also Known as the