Final answer:
The acid-test ratio is calculated by dividing the sum of cash, short-term investments, and net receivables by current liabilities. This ratio measures a company's liquidity and its ability to meet its short-term obligations without relying on the sale of inventory. Option b
Step-by-step explanation:
The acid-test ratio is a financial ratio used to determine a company's ability to pay off its short-term liabilities. It is calculated by dividing the sum of cash, short-term investments, and net receivables by current liabilities. The formula for the acid-test ratio is:
Acid-Test Ratio = (Cash + Short-term Investments + Net Receivables) / Current Liabilities
This ratio measures a company's liquidity and its ability to meet its short-term obligations without relying on the sale of inventory. A higher acid-test ratio indicates a more liquid position for the company. Option b