Which of the following is NOT true regarding the quick ratio?
A) If a company has more current assets than liquid assets, the current ratio will be larger than the quick ratio.
B) A high quick ratio suggests a high ability to pay current liabilities.
C) Liquid assets include cash and cash equivalents, short-term investments, and net accounts receivable.
D) A quick ratio greater than 1 implies a company could not pay all of its current liabilities.

Question

Quizplus · Accepted Answer

A quick ratio greater than 1 means that the company has enough liquid assets to cover all of its current liabilities. Therefore, it implies that the company could pay all of its current liabilities, not the opposite as stated in choice D. Choices A, B, and C are true statements about the quick ratio.

Which of the Following Is NOT True Regarding the Quick