The Acid-Test Ratio Is

question 55

Multiple Choice

The acid-test ratio is

• A)Current assets divided by current liabilities.
• B)Cash and short-term investments divided by current liabilities.
• C)Cash,short-term investments,and accounts receivable divided by current liabilities.
• D)Cash,short-term investments,accounts receivable,and inventory divided by current liabilities.

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Definitions:

Debt Financing

Raising capital through the borrowing of funds to be paid back at a later date, typically through loans or by issuing bonds.

Income Tax Advantage

The financial benefit derived from tax laws that allows for deductions, credits, or exclusions, reducing the overall income tax liability.

Ownership Interest

An individual's or entity's legal share or involvement in an asset, which grants rights and potential financial benefits.

Maturity Value

The amount payable to an investor at the end of a debt instrument's holding period or maturity date, including both the principal and any remaining interest payments.