Question

Identify the other name by which Liquid ratio is known:

• A. Current Ratio
• B. Activity Ratio
• C. Quick Ratio / Acid Test Ratio
• D. Solvency Ratio

Hint:

Liquid ratio = (Current Assets – Inventory) / Current Liabilities, also called Quick or Acid Test Ratio.

Answer 1

The Correct Option is C

Step 1: Understand Liquid Ratio
Liquid ratio measures the company’s ability to meet short-term obligations using liquid assets (excluding inventory).
It is also known as \textit{Quick Ratio} or \textit{Acid Test Ratio}.
Current ratio includes inventory and is different from liquid ratio.
Step 2: Conclusion
Hence, Liquid ratio is also called Quick Ratio or Acid Test Ratio.