The Ratio, Sometimes Called the "Acid Test," Is a More

question 87

Multiple Choice

The ratio, sometimes called the "acid test," is a more stringent measure of than the current ratio.

• A)quick;liquidity
• B)fixed-asset turnover;activity
• C)net profit margin;gross profit margin
• D)equity, activity

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Definitions:

Market Value

The total value of a company or asset in the financial market based on the current price at which it can be bought or sold.

Idle

The state of an asset or resource not being in use, contributing no output or value during a certain period.

Fixed Assets

Long-term tangible assets that are used in the operation of a business and are not expected to be converted to cash in the short term, such as land, buildings, and machinery.

Book Value

Book Value represents the value of a company or an asset as it appears on the balance sheet, calculated by subtracting liabilities from assets.