The acid$-$test ratio differs from the current ratio in that it

Question $15$ options:

$1)$

represents the amount of cash on hand instead of the amount of working capital.

$2)$

excludes inventories and accounts receivable from the numerator of the fraction

because of obsolescence and possible nonpayment.

$3)$

is a stricter test of a company's ability to pay its current debts as they are due

$4)$

signals the need to liquidate marketable securities when it drops below $5$ to $1.$