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Acid test ratio: Acid test ration is also called Quick ratio. This ratio is calculated by dividing the quick assets (Cash, Cash equivalents, Short term investments and current receivables) by total current liabilities for the year. The formula for Acid test ratio is as follows:
To indicate: the difference between the current ratio and acid test ratio.
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Chapter 4 Solutions
Connect Access Card for Financial Accounting: Information and Decisions
- Base on the financial ratios of company A, what is your recommendations and conclusion for company A.arrow_forwardRatio Analysis -Solvency and Leverage Ratios a. Debit Ratio b. Equity Ratio A. Debt Ratio Total Liabilities/ Total Assets B. Equity Ratio Total Equity/Total Assetsarrow_forwardQ2: MULTIPLE-CHOICE QUESTIONS – Financial Ratios Analysis 1- In order to assess a company's ability to fulfill its long-term obligations, an analyst would most likely examine: A. activity ratios. B1. Solvency ratio ç. liquidity ratios.arrow_forward
- Ratios provide a _________ measure of a company’s performance and condition. a. Gross b. Relative c. Qualitative d. Definitivearrow_forwardPresent formulas and examples of the following financial ratios (Financial ratios)a. gross marginb. profit margin on salesc. return on equity (ROE)arrow_forwardHelp me pleasearrow_forward
- The current ratio isa. calculated by dividing current liabilities by current assets. b. used to evaluate a company's liquidity and short-term debt paying ability c. used to evaluate a company's solvency and long-term debt paying ability. d. calculated by subtracting current liabilities from current assets.arrow_forwardAnswer the following question a. Return on equityb. Total assets turnoverc. Return on assetsd. Current ratioe. Receivables turnoverarrow_forwardBusiness ratios of financial statements are generally categorized as one of the following areas, EXCEPT Select one: a. Leverage b. Profitability c. Net Present Value d. Liquidity e. Efficiency (or Activity)arrow_forward
- Define Balance sheet ratiosarrow_forwardWhich of the following ratios is used by the company to determine its ability to pay currently maturing obligations? a. Cash Ration b. Interest Coverage Ratio c. Equity Ratio d. Accounts Receivable turnoverarrow_forwardQuestion Content Area The percentage analysis of increases and decreases in individual items on comparative financial statements is called a.profitability analysis b.horizontal analysis c.solvency analysis d.vertical analysisarrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
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