A company could improve its acid-test ratio by selling some equipment it no longer needs for cash. a. True b. Flase
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Answered on
That statement is true.
The acid-test ratio (also known as the quick ratio) is a measure of a company's ability to pay its short-term obligations using its most liquid assets. It excludes inventory from current assets because inventory might not be easily converted to cash. Selling equipment that is no longer needed for cash would increase the company's cash balance, thereby improving its liquidity and potentially increasing the acid-test ratio.