Which of the following is true of the acid-test ratio?
a) It measures a company's ability to meet its short-term obligations with cash and cash equivalents
b) It indicates how much cash could be realized by selling the inventory
c) It measures a company's ability to pay its current liabilities
d) It measures the ability of the company to earn net income
Ans: c) It measures a company's ability to pay its current liabilities
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