Chapter 9, Problem 4SEQ

To determine

Concept Introduction:

Acid test ratio:

Acid test ratio is also called Quick ratio. This ratio is calculated by dividing the quick assets (Cash, Cash equivalents, Short term investments and current receivables) by total current liabilities for the year. The formula for Acid test ratio is as follows:

  $Acidtestratio=\frac{\left(Cash+Cashequivalents+Shortterminvestments+Accountsreceivables\right)}{CurrentLiabilities}$

To Choose:

The ratio of quick assets to current liabilities.