The Formula to Compute the Acid-Test Ratio Is

question 162

Multiple Choice

The formula to compute the acid-test ratio is

• A)(cash + short-term investments + net current receivables)/current assets.
• B)(cash + short-term investments + net current receivables)/current liabilities.
• C)current liabilities/current assets.
• D)currents assets/current liabilities.

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Definitions:

CPI Construction

The method of creating the Consumer Price Index, which measures changes in the price level of a market basket of consumer goods and services purchased by households.

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy, used to convert nominal GDP into real GDP.

Consumer Price Index

A benchmark capturing the average movement over time in the outlay of urban buyers for a predetermined mix of consumer goods and services.

Consumer Price Index

An index measuring the change over time in the price level of consumer goods and services purchased by households.