Series 7 - General Securities Representative Exam
Preview Mode
An acid test ratio is usually used to test a company's liquidity. Which of the following is the formula for an acid test?
( Current Assets - Inventory ) / Current Liabilities
A
Inventory / ( Current Assets - Current Liabilities )
B
Cash / Current Liabilities
C
Fixed Assets / Fixed Liabilities
D
Explanations
A is the formula for the quick ratio (acid test)