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

Answer Details

The accounting ratio that considers only quick assets to determine the short-term safety margin of a firm is the Acid Test Ratio. Acid Test Ratio is a measure of a company's ability to meet its short-term obligations with its most liquid assets. It is calculated by dividing the sum of quick assets (such as cash, marketable securities, and accounts receivable) by the company's current liabilities. A high Acid Test Ratio indicates that a company has enough liquid assets to pay off its short-term debts, while a low ratio may indicate that a company may have difficulty meeting its short-term obligations.