The acid-test ratio is always smaller than the current ratio.

Name: The acid-test ratio is always smaller than the current ratio.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The acid-test ratio, also known as the quick ratio, is a more conservative measure of liquidity compared to the current ratio. This is because it only includes the most liquid assets such as cash, marketable securities, and accounts receivable. Therefore, the acid-test ratio will always be smaller than the current ratio, which includes all current assets.

The Acid-Test Ratio Is Always Smaller Than the Current Ratio