The acid-test ratio differs from the current ratio in that:
A. The acid-test ratio excludes short-term investments from the calculation.
B. Liabilities are divided by current assets.
C. The acid-test ratio measures profitability and the current ratio does not.
D. The acid-test ratio is a measure of liquidity but the current ratio is not.
E. Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio.
Answer: E
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