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QUESTION
Financial statement analysts among others compute ratios to gauge how the company is performing. One such ratio is the Acid-test (or Quick) Ratio.
Financial statement analysts among others compute ratios to gauge how the company is performing. One such ratio is the Acid-test (or Quick) Ratio.
(1) Provide the formula for the Acid-test (or Quick) Ratio.
(2) Explain why inventories and prepaid expenses are excluded from this calculation
