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.

Answer 1

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.