The quick ratio is measured as:
A) Current assets divided by current liabilities.
B) Cash on hand plus current liabilities, divided by current assets.
C) Current liabilities divided by current assets, plus inventory.
D) Current assets minus inventory, divided by current liabilities.
E) Current assets minus inventory minus current liabilities.

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, is calculated by subtracting inventory from current assets and then dividing the result by current liabilities. This measures a company's ability to meet its short-term obligations with its most liquid assets.

The Quick Ratio Is Measured As