The Acid-Test Ratio

question 5

Multiple Choice

The acid-test ratio:

• A) Measures return on assets.
• B) Is also called the quick ratio.
• C) Is generally greater than the current ratio.
• D) Measures profitability.
• E) Measures inventory turnover.

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Definitions:

Par Value

Par value is the face value of a bond or stock as stated by the issuing company, which may differ from its market value; for stocks, it is often a nominal amount.

Coupon

The interest rate stated on a bond when issued, which is paid by the issuer to the bondholder at specified intervals until maturity.

Yield To Maturity

The total return anticipated on a bond if it is held until it matures, considering both interest payments and capital gains.

Real Rate

The expected return rate an investor anticipates, adjusted for inflation.