Which of the following describes the key significance of the acid-test ratio?

Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, measures a company's ability to pay its current liabilities if they are due immediately. It only takes into account the most liquid assets such as cash, marketable securities, and accounts receivable that can be quickly converted into cash. This ratio is important as it gives insight into a company's short-term financial health and its ability to meet its financial obligations in the near future.

Which of the Following Describes the Key Significance of the Acid-Test