GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Acid test ratio
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Capital turnover ratio
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Bad Debt to sales ratio
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lnventory turnover ratio
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Detailed explanation-1: -Cash Ratio or Absolute liquidity ratio.
Detailed explanation-2: -An acid ratio, also referred to as an acid test liquidity, acts as a guide to indicate whether a business has sufficient liquid resources to meet its current liabilities. It is calculated as (Current Assets + Stock) ÷ Current Liabilities. If the Acid Ratio is less than 1 there could be a concern.
Detailed explanation-3: -The acid-test ratio compares a company’s “quick assets” (cash and accounts receivable) to its current liabilities. It is one of six basic calculations used to determine short-term liquidity-the ability of a company to pay its bills as they come due.
Detailed explanation-4: -Liquidity ratio measures the company’s ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio and quick ratio. It also indicates cash flow positioning. It is also called as acid test ratio and quick ratio. Was this answer helpful?
Detailed explanation-5: -Current Ratio. Quick Ratio or Acid test Ratio. Cash Ratio or Absolute Liquidity Ratio. Net Working Capital Ratio.