Asked by Kristopher Curry on May 23, 2024
Verified
The acid-test ratio is also called the quick ratio.
Acid-Test Ratio
A liquidity ratio that measures a company's ability to pay off its current liabilities with its quick assets.
Quick Ratio
A liquidity ratio that measures a company's ability to cover its short-term obligations with its most liquid assets, excluding inventory.
- Appreciate the critical role of liquidity ratios, notably the acid-test ratio and current ratio, in determining a company's short-term financial viability.
Verified Answer
FT
Fakiyesi TosinMay 29, 2024
Final Answer :
True
Explanation :
The acid-test ratio is another name for the quick ratio, which is a liquidity ratio used to measure a company's ability to pay off short-term liabilities with its quick assets (assets that can be easily converted to cash).
Learning Objectives
- Appreciate the critical role of liquidity ratios, notably the acid-test ratio and current ratio, in determining a company's short-term financial viability.