Which of the Following Is True of the Acid-Test Ratio

question 132

Multiple Choice

Which of the following is true of the acid-test ratio?

• A)It measures a company's ability to pay its current liabilities.
• B)It measures the ability of the company to earn net income.
• C)It measures a company's ability to meet its short-term obligations with cash and cash equivalents.
• D)It indicates how much cash could be realized by selling the inventory.

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Definitions:

Right-to-work Laws

Legislation that prohibits compulsory union membership as a condition of employment, allowing individuals to work without being forced to join a union.

Unionized Firm

A company where the workforce is represented by a union in negotiations regarding employment terms.

Supply Of Labor

The total hours that workers wish to work at a given wage rate, representing the workforce available for employment.

Unionized

A condition where employees are organized into unions to collectively bargain with employers over wages, benefits, and working conditions.