Practice Quick Ratio (Acid Test Ratio) - 19.2.1.b | 19. Financial Statement Analysis – Ratio Analysis | Management 1 (Organizational Behaviour/Finance & Accounting)
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19.2.1.b - Quick Ratio (Acid Test Ratio)

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the formula for the Quick Ratio?

💡 Hint: Think about what assets you need for immediate short-term liabilities.

Question 2

Easy

What does a Quick Ratio of 1:1 signify?

💡 Hint: Remember, it relates to financial health.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does the Quick Ratio measure?

  • Long-term profitability
  • Short-term liquidity
  • Debt-to-equity ratio

💡 Hint: Think about what 'Quick' indicates.

Question 2

True or False: A Quick Ratio below 1 means the company cannot meet its short-term liabilities.

  • True
  • False

💡 Hint: Consider what the '1' signifies in financial health.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

Calculate the Quick Ratio for a technology startup that has Current Assets of $850,000, Inventory of $300,000, and Current Liabilities of $600,000. Analyze the implications of your result for the startup’s financial standing.

💡 Hint: Calculate carefully and think about the liquidity implications.

Question 2

A retail company claims a Quick Ratio of 1.2. If its inventory suddenly declines by 35%, recalculate the Quick Ratio and discuss the potential impacts on liquidity and operations.

💡 Hint: Consider what happens when inventory drops and how it affects your assets calculation.

Challenge and get performance evaluation