Question
A low acid-test ratio can be the result of too much inventory.
True
False
True
False
Answers
GPT-4o mini
True
A low acid-test ratio can indicate that a company has too much inventory relative to its liquid assets (like cash and receivables). The acid-test ratio is a measure of a company's ability to cover its short-term liabilities without relying on inventory sales, so high inventory levels can negatively affect this ratio.
A low acid-test ratio can indicate that a company has too much inventory relative to its liquid assets (like cash and receivables). The acid-test ratio is a measure of a company's ability to cover its short-term liabilities without relying on inventory sales, so high inventory levels can negatively affect this ratio.