Answer: True
Step-by-step explanation:
The acid-test ratio also referred to as the quick ratio is used to compare the short-term assets for a particular company to the short-term liabilities so as to know if the short-term debt can be settled quickly based on the available cash.
Holding all else constant, it should be noted that a reduction in cash will also lead to a reduction in acid-test ratio. We should note that when cash or any other short term investment reduces, there'll also be a reduction in the acid test ratio.
Therefore, the answer is True.