Accounting for IGCSE & O level - Advanced Principles (Section 4 - No. 18)
What is the primary purpose of the quick ratio (acid test ratio)?
To assess a company's ability to pay off its short-term obligations with its most liquid assets
To measure a company's overall profitability
To evaluate a company's long-term debt position
To determine the efficiency of a company's inventory management
Explanation
The quick ratio measures the ability of a business to pay its immediate and short-term debts without having to sell all inventory.
Comments (0)
