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:

Recession Of 2008

A severe global economic downturn triggered by the collapse of the housing market and financial institutions, leading to widespread job losses and economic instability.

Housing Bubble

A situation in the real estate market where house prices are driven to levels way beyond their true values due to excessive demand, speculation, or unsustainable economic factors, eventually leading to a sharp decline.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by significant declines in industrial production, widespread unemployment, and deflation.

Public Policy

Government actions and regulatory measures that aim to address public issues, guide economic, social, and administrative activities.