The acid-test (quick) ratio is more stringent than the current ratio because it excludes:Marketable securitiesInventoryAccounts receivableCash

The acid-test ratio is a measure of a company's:a.Liquidityb.Profitabilityc.Solvencyd.Efficiency

Why is the acid-test ratio considered to be a more conservative measure of liquidity than the current ratio?Multiple ChoiceBecause it considers assets available to pay long-term liabilities.Because it eliminates items like accounts receivable and current investments.Because it only considers cash available to pay current liabilities.Because it eliminates current assets such as inventories and prepaid expenses.

Select all that applyWhich of the following statements are true regarding the acid-test ratio? (Choose every correct answer.)Multiple select question.Temporary cash investments are included in the numerator of the acid-test ratio.Accounts payable are included in the numerator of the acid-test ratio.The acid-test ratio uses the same denominator as does working capital.The acid-test ratio can be calculated as (Cash (including temporary cash investments) + accounts receivable) divided by current liabilities.The acid-test ratio is sometimes called the quick ratio.

An acid-test ratio between and 1.0 is usually considered satisfactory but could also be a sign of some cash flow problems.

Calculate the acid-test ratio, assuming that cash + accounts receivable = $50,000, merchandise inventory = $10,000, noncurrent assets = $40,000, current liabilities = $20,000, noncurrent liabilities = $50,000, and stockholders' equity = $30,000. (Round your answer to one decimal place, if necessary.)Multiple choice question.0.70.92.53.0