The ratio obtained by dividing ‘quick assets’ by current liabilities is called A. Turnover ratio B. Acid test ratio C. Solvency ratio D. None of these

The correct answer is B. Acid test ratio.

The acid test ratio, also known as the quick ratio or liquidity 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 a company’s quick assets by its current liabilities. Quick assets are a company’s most liquid assets, which means they can be converted into cash quickly. Current liabilities are a company’s short-term

A high acid test ratio indicates that a company has a good ability to meet its short-term obligations. A low acid test ratio indicates that a company may have difficulty meeting its short-term obligations.

Option A, turnover ratio, is a measure of how efficiently a company uses its assets to generate sales. It is calculated by dividing a company’s net sales by its average total assets.

Option C, solvency ratio, is a measure of a company’s ability to meet its long-term obligations. It is calculated by dividing a company’s long-term debt by its equity.

Option D, none of these, is incorrect.