Quick assets (cash,short-term investments,and current receivables)divided by current liabilities is the:
A)Acid-test ratio.
B)Current ratio.
C)Working capital ratio.
D)Current liability turnover ratio.
E)Quick asset turnover ratio.

Question

Quizplus · Accepted Answer

The formula given refers to the acid-test ratio, which measures a company's ability to pay off its current liabilities with its most liquid assets. Quick assets, which are assets that can be easily converted into cash, are divided by current liabilities to get the acid-test ratio.

Quick Assets (Cash,short-Term Investments,and Current Receivables)divided by Current Liabilities Is