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Question
Which one of-the following statement is incorrect?
Options
Liquidity ratios are calculated to measure the short-term solvency of the business.
Current ratio is also known as Acid Test Ratio.
Solvency ratios are calculated to determine the ability of the business to service its debt in the long run.
Proprietary ratio expresses the relationship of proprietor's funds to net assets/total assets.
Solution
Current ratio is also known as Acid Test Ratio.
Explanation:
Quick ratio is also known as Acid Test Ratio, which measures a company's ability to meet its short-term financial obligation.
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