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Genrish500 [490]
2 years ago
7

The acid-test ratio takes the sum of cash, short-term investments, and ________ and divides the total by current liabilities. It

helps determine immediate short-term debt-paying ability.
Business
1 answer:
Anna [14]2 years ago
8 0

The acid-test ratio takes the sum of cash, short-term investments, and receivables and divides the total by current liabilities. .

Acid test ratio is also known as quick ratio. It is a measure of the capability of a firm to use its short term assets to meet current liabilities. It is an example of an activity ratio.

Acid test ratio = (current asset - inventory) / current liabilities

The higher the  acid-test ratio, the better the ability of a firm to meets its short term liabilities.

A similar question was answered here: brainly.com/question/1114476

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