The Acid-Test Ratio Differs from the Current Ratio in That

question 188

Multiple Choice

The acid-test ratio differs from the current ratio in that it

• A)represents the amount of cash on hand instead of the amount of working capital.
• B)excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible nonpayment.
• C)is a stricter test of a company's ability to pay its current debts as they are due.
• D)signals the need to liquidate marketable securities when it drops below 5 to 1.

---

Definitions:

Type 2 Diabetes

A chronic condition that affects the way the body processes blood sugar (glucose), characterized by insulin resistance and/or deficiency.

Blindness

is the condition of lacking visual perception due to physiological or neurological factors.

Sugar Low

A condition characterized by a below-normal level of blood glucose, often leading to symptoms like dizziness, sweating, and confusion.