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A. The acid-test ratio will be lower.
B. The acid-test ratio will be higher.
C. The acid-test ratio will be the same.
D. The acid-test ratio could be either higher or lower.
A. Acid test ratio will be lower
A. The acid-test ratio will be lower.
This is because the acid-test ratio's numerator only includes Cash, Marketable Securities and Receivables, unlike in computing for Current Ratio where the numerator includes cash, marketable securities, receivables, Inventory, Prepaid Expenses and other current assets.
It is A. The acid-test ratio will be lower.
The Answer is 'A' - Acid Test Ratio will be lower.
As the current ratio is3:1, the company can use the current assets to pay off the current liabilities three times. In other words the current assets are three times the size of the current liabilities.
Acid Test Ratio is arrived at by dividing Quick Current Ratio (Current Assets - Inventory) by Current Liabilities, as the the Current Ratio is3:1 the probability of Quick ratio being lower is high.
choose part (a) .it depends on the circumstances of the acid test rattio .since when we have a high ratio i,e3:1 ,quick ratio or acid test ratio or liquid ratio it is a clarification of the current ratio so the production of this company qill tend to have a week acid test ratio during this period .
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Answer A is the correct answer because current assets will be lower
Acid test ratio will be lower as we deduct stock value in the current assets while calculation quick ration thats why current assets will be less in Quick Ratio
The acid-test ratio will be lower.
For calculation of Acid-Test Ratio we only includes cash and cash equivalent in current asset and no change in current liabilities.
It is A. The acid-test ratio will be lower.
Since we will remove Inventory from numerator the ratio will be reduced
