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The _______ ratio takes the sum of cash, short-term investments, and current receivables and divides the total by current liabilities. it helps determine immediate short-term debt-paying ability.

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The acid-test ratio divides the total by current liabilities after adding up cash, short-term investments, and current receivables. It aids in determining a person's capacity for quick-term debt repayment.

The acid test ratio is what?

The acid test, also known as the quick ratio, compares a company's most short-term assets to its most short-term liabilities in order to evaluate whether it has enough cash to pay its immediate obligations, such short-term debt.

Current assets that are difficult to dispose quickly, such inventory, are disregarded by the acid-test ratio.

To know more about acid test ratio, click here:-

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