How Do You Determine the Acid-Test Ratio

question 48

Multiple Choice

How do you determine the acid-test ratio?

• A) The sum of cash and short-term investments divided by short-term debt.
• B) Current assets divided by current liabilities.
• C) Current assets divided by short-term debt.
• D) The sum of cash, short-term investments and net receivables divided by current liabilities.

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Definitions:

Tax Revenue

The income that is gained by governments through taxation, which is used to fund public services and infrastructure.

Total Burden

The complete impact, often financial or economic, borne by an entity or system as a consequence of a particular action or policy.

Partnerships

A lawful business structure involving two or more people who jointly manage and distribute earnings.

Proprietorships

A business structure owned by a single individual who is responsible for its liabilities and entitled to its profits.