The acid-test ratio measures:

Question

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The acid-test ratio, also known as the quick ratio, measures a company's ability to pay its current liabilities with its most liquid current assets, such as cash, short-term investments, and accounts receivable. It excludes inventory from the calculation as it may not be easily sold or converted into cash in case of an emergency. Choices B, C, and D refer to other financial ratios, such as the accounts receivable turnover ratio, inventory turnover ratio, and asset turnover ratio, respectively.

The Acid-Test Ratio Measures