The quick acid test ratio contains all of the following except: a

Accounting Aug 10, 2020

The quick acid test ratio contains all of the following except:

a.marketable securities b.cash c.prepaid assets d.accounts receivable

Expert Solution

The quick or acid test ratio is calculated by adding cash, cash equivalents, short-term investments, and current receivables together then dividing them by current liabilities.

Quick Ratio = (Cash + Cash Equivalents + Short-term Investments + Current Receivables) / Current Liabilties

Quick Ratio = (Total Current Assets - (Inventories + Prepaid Expenses))/Current Liabilities

The correct option is C "Prepaid Assets".

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