In determining the short-term liquidity of firm

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In determining the short-term liquidity of a firm, the current ratio is usually considered a better guide than the acid-test ratio, and the acid-test ratio is considered a better guide than the cash ratio. Why do you think this is? Do you agree or disagree with the ranking of current ratio first, acid-test ratio second, and cash ratio third for short-term liquidity determination? Discuss when the acid-test ratio would be preferred over the current ratio and when the cash ratio would be preferred over the acid-test ratio.

Reference no: EM131291801

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