The Acid-Test (Quick) Ratio

question 220

Multiple Choice

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 statement of financial position.
• D) is the same as the current ratio except it is rounded to the nearest whole percent.

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Definitions:

Taxation

Taxation is the process by which governments finance their expenditure by imposing charges on citizens and corporate entities.

Excise Taxes

Taxes imposed on specific goods, services, or transactions, often including alcohol, tobacco, and gasoline, generally used to discourage consumption or raise revenue.

Elasticity

A measure of how much the quantity demanded or supplied of a good responds to changes in prices, income, or other economic factors.

Price Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in its price.