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:

Preconceptions

Pre-existing ideas or biases formed before having evidence or detailed knowledge, often influencing perception and decision-making.

Intuition

Intuition involves understanding or knowing something instinctively, without the need for conscious reasoning.

Algorithms

A set of rules or procedures to be followed in calculations or problem-solving operations, often used by computers.

Overconfidence

A cognitive bias that causes someone to overestimate their abilities, performance, the level of control they have, or their level of knowledge.