If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase.

Question

Quizplus · Accepted Answer

If a firm has a quick ratio of 1, it means that it has exactly enough quick assets (cash, marketable securities, and accounts receivable) to cover its current liabilities. The subsequent payment of an account payable will decrease the amount of cash on hand, which in turn will decrease the quick ratio. Therefore, the ratio will not increase but will actually decrease.

If a Firm Has a Quick Ratio of 1, the Subsequent