The ratio of total cash,marketable securities,accounts receivable,and short-term notes to current liabilities is:
A) the debt-to-equity ratio.
B) the current ratio.
C) the acid-test ratio.
D) working capital.

Question

Quizplus · Accepted Answer

The ratio of total cash, marketable securities, accounts receivable, and short-term notes to current liabilities is known as the acid-test ratio, also called the quick ratio. This ratio measures the company's ability to pay off its current liabilities using its most liquid assets. The formula for the acid-test ratio is (Cash + Marketable Securities + Accounts Receivable + Short-term notes) / Current Liabilities.

The Ratio of Total Cash,marketable Securities,accounts Receivable,and Short-Term Notes to Current