Which of the following is not included in the calculation of the numerator in the acid-test ratio?

Question

Quizplus · Accepted Answer

The acid-test ratio (also known as quick ratio) is a liquidity ratio that measures a company's ability to pay its short-term obligations with its most liquid assets. The numerator of the acid-test ratio includes only the most liquid current assets of the company, which are cash, short-term investments, and net current receivables (accounts receivable minus allowance for doubtful accounts). Prepaid expenses and inventory are not included in the numerator because they are less liquid and may take time to convert to cash. Therefore, choice A is the correct answer as prepaid expenses are excluded from the calculation of the acid-test ratio.

Which of the Following Is Not Included in the Calculation