Which of the following will increase a firm's quick ratio assuming no other accounts change?
A)A reduction in accounts payable
B)An increase in accounts receivable
C)An increase in marketable securities
D)All of these statements will increase a firm's quick ratio

Question

Quizplus · Accepted Answer

A quick ratio is a measure of a company's ability to meet its short-term obligations. It is calculated by dividing the company's liquid assets by its current liabilities. Liquid assets include cash, marketable securities, and accounts receivable. Current liabilities include accounts payable, short-term debt, and accrued expenses.A reduction in accounts payable will increase the quick ratio because it will reduce the company's current liabilities. An increase in accounts receivable will increase the quick ratio because it will increase the company's liquid assets. An increase in marketable securities will increase the quick ratio because it will increase the company's liquid assets.

Which of the Following Will Increase a Firm's Quick Ratio