Multiple Choice
The acid-test ratio differs from the current ratio in that:
A) Liabilities are divided by current assets.
B) Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio.
C) The acid-test ratio is a measure of profitability but the current ratio does not.
D) The acid-test ratio excludes short-term investments from the calculation.
E) The acid-test ratio is a measure of liquidity but the current ratio is not.
Correct Answer:
Verified
Correct Answer:
Verified
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