Question

g The acid-test ratio is Multiple Choice Cash, short-term investments, accounts receivable, and inventory divided by current liabilities. Cash, short-term investments, and accounts receivable divided by current liabilities. Current assets divided by current liabilities. Cash and short-term investments divided by current liabilities.

Answer 1

Current assets divided by current liabilities.

Step-by-step explanation:

Acid test ratio is an example of a liquidity ratio. Liquidity ratio measures a firm's ability to meet its short term obligations.

An acid test ratio is current assets / current liabilities

Current assets includes :

1. Cash and cash equivalents
2. Marketable securities
3. Accounts receivable

Current liabilities include :

1. Accrued liabilities
2. short term debts
3. accounts payable