The Acid-Test Ratio Measures

question 33

Multiple Choice

The acid-test ratio measures:

• A) how well a company can pay its current liabilities with its most liquid current assets.
• B) how many days it takes, on average, to collect receivables.
• C) how many days it takes, on average, to sell the inventory.
• D) the number of times per year a company sells goods and collects receivables.

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Definitions:

Normally Distributed

A type of continuous probability distribution for a real-valued random variable, characterized by a symmetric bell-shaped curve.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual values deviate from the mean.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, representing an average distance from the mean.

Mean

The average value obtained by adding all the data points in a set together and then dividing by the number of data points.