An Acid Test (Quick) Ratio of 0

question 33

Multiple Choice

An acid test (quick) ratio of 0.75 to 1 would indicate:

• A) a ratio that would not allow a company to pay off all current liabilities with quick assets.
• B) for every $0.75 of short-term debt there is $1.00 of quick assets to meet short-term obligations.
• C) for every $1 of current assets there is $0.75 of short-term debt.
• D) Both A and B are correct.