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[ramstein]

When bankers look at accounting ratios of a firm, do they look at the current ratio or the acid-test ratio?

it says here http://www.financesc...ity-ratios.html

"The Quick or Acid-Test Ratio is very similar to the Current Ratio only that it eliminates Inventory and Prepaid Assets from the calculation of Current Assets. Why inventory? Inventory is often the least liquid current asset that the company can hold. Inventory is also prone to obsolescence, damage or theft. Furthermore, a large amount of inventory being held shows operation inefficiency of the firm"

So i guess the Acid-TEst ratio is more relevant than the current ratio and thats what bankers use?