A measure of the ability of an entity to pay all of its current liabilities if they come due immediately is the:

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, measures the ability of an entity to pay off its current liabilities using quick assets only (such as cash, marketable securities, and accounts receivable) without relying on inventory or prepaid expenses. This measure excludes assets that may be difficult to convert to cash quickly, which makes it a more conservative measure of liquidity compared to the current ratio (which includes all current assets in the computation).

A Measure of the Ability of an Entity to Pay