Questions and Answers
What does the current ratio measure?
A company's ability to pay its short-term liabilities with its short-term assets
What is the quick ratio also known as?
Acid-test ratio
How is the quick ratio different from the current ratio?
It excludes inventory from current assets
Which ratio includes inventory in its calculation?
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Which ratio provides a more stringent measure of a company's liquidity?
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Which ratio is unaffected by changes in inventory valuation methods?
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