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acid test / quick ration = quick assets / quick liablities
quick assets = current assets - stock- prepaid expenses
quick liablities = current liablities - bank overdraft
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∙ 13y ago
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What does the acid test ratio not include cash or accounts receivable or supplies or inventory?
inventory
What is the ideal acid test ratio?
some where between 1 to 1.5
If a company converts a short-term note payable into a long-term note payable what would this transaction do?
decrease the current ratio and decrease the acid-test ratio
Evaluation of a company's ability to pay current liabilities?
Use the following ratios to evaluate a company's ability to pay current liabilities: Working Capital Ratio Current Ratio Acid-test Ratio
Inventory of merchandise is a current asset?
Yes, as inventories could be considered as current assets. But wil calcuating quick ratio or acid test ratio, inventories to be deducted from other current assets.
The acid test ratio does not include 1cash 2accts receivable 3supplies 4inventory?
D
What does the acid test ratio not include cash or accounts receivable or supplies or inventory?
inventory
What is a measure of liquidity?
the two ratios that measure liquidity is acid test and current ratio. the acid test ratio is current assets- stock/ current liabilities the current ratio is current assets/ current liabilities
300000 current assets 100000 current liabilities and inventory of 150000 what is the acid test ratio?
acid test ratio = quick assets / current liabilitiesacid test ratio = 150000 / 100000acid test ratio = 150 %
An example of liquidity ratio is the?
current ratio and acid test ratio are examples of liquidity ratios'. current ratio is current asset's/ current liabilities. acid test ratio is current assets- stock / current liabilities.
Another name for the acid test ratio is?
Other names are the quick ratio ot the liquid ratio
Should an acid-test ratio increase or decrease?
ok
What is the ideal acid test ratio?
some where between 1 to 1.5
Disadvantages of high acid test ratio?
carl is a semi-kin
Why quick acid ratio is called acid test ratio?
Acid-test or Quick Ratio measures the ability of a company to use its cash or near cash assets to extinguish or pay-off its current liabilities immediately. Near cash assets are those that can be quickly converted to cash at close to their book values.Formula:ATR = (Current Assets - (Inventories + Prepayments)) / Current LiabilitiesA company with a quick ratio of less than 1 cannot currently pay-off all its current liabilities. Any good company would want to maintain their acid test ratio to be greater than 1 at all times.
What are the ratios in liquidity?
liquidity ratios include current ratio (which is current assets/current liabilities) and acid test (which is current assets- stock/current liabilities.) liquidity ratio's shows how good a business is a paying off its debts. hope this helps.
If a company converts a short-term note payable into a long-term note payable what would this transaction do?
decrease the current ratio and decrease the acid-test ratio
