Question:medium

Identify the other name by which Liquid ratio is known:

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Liquid ratio = (Current Assets – Inventory) / Current Liabilities, also called Quick or Acid Test Ratio.
Updated On: Mar 26, 2026
  • Current Ratio
  • Activity Ratio
  • Quick Ratio / Acid Test Ratio
  • Solvency Ratio
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The Correct Option is C

Solution and Explanation

Step 1: Understand Liquid Ratio
The liquid ratio assesses a company's capacity to satisfy immediate liabilities with readily available assets, specifically excluding inventory.
This metric is alternatively termed the \textit{Quick Ratio} or \textit{Acid Test Ratio}.
In contrast to the liquid ratio, the current ratio encompasses inventory.
Step 2: Conclusion
Therefore, the liquid ratio is also referred to as the Quick Ratio or the Acid Test Ratio.
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