Trend of the acid-test ratio


If the trend of the current ratio is increasing while the trend of the acid-test ratio is decreasing over a period of time, this could be a warning that the firm is

a. carrying excess inventories.

b. depleting its inventories.

c. having trouble collecting its receivables.

d. purchasing too much property, plant, and equipment.

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Finance Basics: Trend of the acid-test ratio
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