It is important to review not just the Current Ratio, but also the Quick Ratio and Cash Ratio because:
A)the Cash Ratio must always provide a greater statistic than the Current Ratio and Quick Ratio.
B)the Quick Ratio includes inventory that can be easily liquidated for cash.
C)a low Current Ratio may not necessarily indicate a problem with a company.
D)companies can operate with a Cash Ratio close to zero and maintain liquidity.
E)GAAP requires it.

Question

Quizplus · Accepted Answer

The Answer of It is important to review not just the Current Ratio, but also the Quick Ratio and Cash Ratio because:
A)the Cash Ratio must always provide a greater statistic than the Current Ratio and Quick Ratio.
B)the Quick Ratio includes inventory that can be easily liquidated for cash.
C)a low Current Ratio may not necessarily indicate a problem with a company.
D)companies can operate with a Cash Ratio close to zero and maintain liquidity.
E)GAAP requires it.

It Is Important to Review Not Just the Current Ratio