Question

...... is also known as the Acid Test Ratio.

• A. Current ratio
• B. Quick ratio
• C. Gross profit ratio
• D. Return on investment ratio

Hint:

The formula for the quick ratio is: \(\text{Quick Assets} \div \text{Current Liabilities}\).

Answer 1

The Correct Option is B

The quick ratio, also known as the acid test ratio, measures the ability of a company to meet its short-term liabilities using its most liquid assets. It excludes inventory from current assets to provide a more accurate measure of liquidity.