MIghtyG
Prominent Member
Got a test coming up in a few days and one of the topics is finances, one of the questions asks to work out the current ratio and quick ratio for a company.
I can work this out easy enough, the course im working on defines the current ratio as current assets/current liabilities, and the quick ratio as [Current assets - inventories] / current liabilities.
Simple, the problem comes when it asks me "do they pass the acid test" the acid test being the quick ratio. Is it a simple case of if they have a quick ratio less than 1 then they have failed, or should I be looking into it more?
I can work this out easy enough, the course im working on defines the current ratio as current assets/current liabilities, and the quick ratio as [Current assets - inventories] / current liabilities.
Simple, the problem comes when it asks me "do they pass the acid test" the acid test being the quick ratio. Is it a simple case of if they have a quick ratio less than 1 then they have failed, or should I be looking into it more?
