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pashok25 [27]
2 years ago
9

Which liquidity ratio is considered to be the most stringent because it eliminates inventory in its measurement

Business
1 answer:
balu736 [363]2 years ago
5 0

Acid test or quick ratio is the liquidity ratio that is most stringent because it

eliminates inventory in its measurement.

Acid test ratio can be calculated by:

<u>Current assets - inventory</u>

current liabilities

Acid test ratio eliminates the inventory which is the least liquid asset from

current assets. This ratio help companies determine how fast it can convert

its assets into cash in order to take care of its liabilities.

Read more about Acid test ratio on brainly.com/question/25814739

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