Liquid Ratio is also known as:

(A) Current Ratio

(B) Quick Ratio

(C) Acid- Test Ratio

(D) Working Capital Ratio

Choose the correct answer from the options given below:

Liquid Ratio is a liquidity ratio that measures a firm's ability to pay off its current liabilities using its most liquid assets (excluding inventory and prepaid expenses).

The formula is:

Liquid Ratio = $\frac{\text{Liquid Assets}}{\text{Current Liabilities}}$

or

Liquid Ratio = $\frac{\text{Current Assets - Inventory - Prepaid Expenses}}{\text{Current Liabilities}}$

Analyzing each alternative:

(A) Current Ratio – This is different from Liquid Ratio. Current Ratio includes all current assets including inventory and prepaid expenses.

(B) Quick Ratio – This is another name for Liquid Ratio. Both ratios measure the same thing and use the same formula.

(C) Acid-Test Ratio – This is also another name for Liquid Ratio. It is called "acid-test" because it tests whether a company can meet its immediate obligations without relying on inventory sales.

(D) Working Capital Ratio – This term typically refers to Current Ratio, not Liquid Ratio.

Therefore, Liquid Ratio is also known as Quick Ratio and Acid-Test Ratio only.

Correct Answer: Option 4 – (B) and (C) only