Which of the following depicts the quick ratio?
A)Cash + accounts receivable + short-term investments) ÷ current liabilities
B)Cash + accounts receivable) ÷ total assets
C)Current assets - current liabilities) ÷ total assets
D)Cash + inventory) ÷ current liabilities

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet short-term obligations without relying on inventory. It is calculated by dividing the sum of cash, accounts receivable, and short-term investments by current liabilities. Option A is the correct formula for calculating the quick ratio.

Which of the Following Depicts the Quick Ratio