The current ratio and the acid test ratio both measure financial leverage.

Name: The current ratio and the acid test ratio both measure financial leverage.
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Question

Quizplus · Accepted Answer

The current ratio and the acid test ratio are both measures of liquidity, not financial leverage. The current ratio looks at a company's ability to pay its debts in the short-term, while the acid test ratio examines its ability to pay off immediate liabilities using only its most liquid assets.

The Current Ratio and the Acid Test Ratio Both Measure