Ratios: Quick (Acid Test) Ratio Video Lessons

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Problem: The acid-test (quick) ratio a. is used to quickly determine a company's solvency and long-term debt paying ability. b. relates cash, short-term investments, and net receivables to current liabilities. c. is calculated by taking one item from the income statement and one item from the balance sheet. d. is the same as the current ratio except it is rounded to the nearest whole percent.

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The acid-test (quick) ratio

a. is used to quickly determine a company's solvency and long-term debt paying ability.

b. relates cash, short-term investments, and net receivables to current liabilities.

c. is calculated by taking one item from the income statement and one item from the balance sheet.

d. is the same as the current ratio except it is rounded to the nearest whole percent.

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