Respuesta :
The sum of cash, current investments, and accounts receivable divided by current liabilities equals the (C) acid-test ratio.
What is the acid-test ratio?
- The quick ratio, also known as the acid-test ratio, is a type of liquidity ratio in finance that measures a company's ability to use its near cash or quick assets to immediately extinguish or retire its current liabilities.
- It is defined as the proportion of readily available or liquid assets to current liabilities.
- Quick assets are current assets that can presumably be converted to cash quickly at close to book value.
- A normal liquid ratio is defined as 1:1.
- A company with a quick ratio of less than one is currently unable to fully repay its current liabilities.
- The acid-test ratio equals the sum of cash, current investments, and accounts receivable divided by current liabilities.
Therefore, the sum of cash, current investments, and accounts receivable divided by current liabilities equals the (C) acid-test ratio.
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The correct question is given below:
The sum of cash, current investments, and accounts receivable divided by current liabilities equals the?
(A) current ratio
(B) asset turnover ratio
(C) acid-test ratio
