JAMB Accounting 2007 Objective — Question 12

Question 12 of 46 from the Joint Admissions and Matriculation Board (JAMB) Accounting 2007 Objective paper, with the correct answer and a full explanation.

An accounting ratio that considers only quick assets to determine the short-term safety margin of a firm is the

A. fixed assets ratio
B. capital gearing ratio
C. current assets ratio
D. acid test ratioCorrect

Explanation

The acid-test (quick) ratio = (Current assets - Stock) / Current liabilities. It measures a firm's ability to meet short-term obligations using only quick (liquid) assets.

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