Final answer:
The statement is FALSE. The Current Ratio includes all current assets, while the Quick Ratio excludes less liquid assets like inventory and is a more conservative measure of liquidity.
Step-by-step explanation:
The statement that the Current Ratio measures the same as the Quick Ratio (Acid Test) is FALSE. Although both ratios are used to evaluate a company's short-term liquidity and its ability to pay off its immediate obligations, they include different components in their calculations. The Current Ratio is broader and includes all current assets, whereas the Quick Ratio is more conservative and excludes less liquid current assets such as inventory and prepaids.
The Current Ratio is calculated by dividing a company's total current assets by its total current liabilities. This includes assets that can be converted into cash within a year, like inventory, accounts receivable, and cash.
On the other hand, the Quick Ratio is calculated by dividing the sum of cash, marketable securities, and accounts receivable by the total current liabilities, deliberately excluding inventory because it is not as easily liquidated.