Liquidity
Ratios
vQuick ratio (the
Acid Test)
vJust like
the quick ratio BUT subtract inventory from assets
(WHY??)
vEX: C. assets = 6
mill; Inven = 3 mill; C. Liabilities
= 2 mill
vQuick ratio = (6 –
3)/2 = 1.5
vWant quick
ratio to be at least 1