How is the quick ratio (acid test ratio) calculated?

The quick ratio, also known as the acid test ratio, is a measure of a company's short-term liquidity and ability to meet its current obligations without relying on the sale of inventory. The correct calculation involves adding cash, marketable securities, and accounts receivable, and then dividing that sum by current liabilities. This formula focuses on the most liquid assets, which can be quickly converted into cash, providing a clearer picture of financial stability compared to the current ratio, which includes inventory.

By using cash, marketable securities, and accounts receivable, this calculation emphasizes the assets that can be readily used to pay off short-term liabilities. Hence, this ratio is particularly useful for creditors and investors in assessing a company's immediate financial health. Moreover, current liabilities serve as the denominator to represent the obligations that need to be settled in the near term, reinforcing the focus on liquidity.

The other options do not accurately reflect the quick ratio's intended calculation, either omitting essential components or misrepresenting the relationship between assets and liabilities. For example, simply subtracting current liabilities from current assets or calculating net income relative to net sales does not directly address liquidity in the same targeted manner as the quick ratio does.