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Engineering Economy - Engineering

Q1:

The ratio obtained by dividing 'quick assests' by current liabilities is called

A Turnover ratio

B Acid test ratio

C Solvency ratio

D None of these.

ANS:B - Acid test ratio

The quick ratio is calculated by adding cash, cash equivalents, short-term investments, and current receivables together then dividing them by current liabilities. Sometimes company financial statements don't give a breakdown of quick assets on the balance sheet.