The Acid-Test Ratio Is Current Assets Divided by Current Liabilities

question 43

True/False

The acid-test ratio is current assets divided by current liabilities.

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Definitions:

Inventory Turnover

Inventory turnover is a ratio indicating how many times a company has sold and replaced inventory over a certain period, helping to measure the efficiency of inventory management.

Net Income

The total profit of a company after all expenses, taxes, and deductions have been subtracted from total revenue.

Balance Sheet

A financial statement that provides a snapshot of a company's financial condition at a specific time, showing assets, liabilities, and shareholder equity.

Vertical Integration

A method by which a firm broadens its activities to cover multiple points within its production sequence, like when a manufacturing entity possesses its supplier and/or distribution channels.