URGENG

Amy and Fred calculate the acid test ratio. This is similar to the current ratio, but more stringent because it excludes inventories. This is because inventories are likely to be less liquid than other current assets, such as cash and cash equivalents. This ratio is given below: Acidtestratio=CurrentliabilitiesCurrentassets(excludinginventories) They calculate the acid test ratio and discover it is 0.143 for 2016 and 0.182 for 2017 : Acidtestratio2016=280036573256=0.143Acidtestratio2017=307045624002=0.182 Which of the following is correct? The liquid current assets do not cover the current liabilities. The liquid current assets do cover current liabilities