Creditors would prefer
1) a quick ratio of 1.2 to a quick ratio of 0.8
2) a quick ratio of 0.8 to a quick ratio of 1.2
3) days sales outstanding of 46 to a
Days sales outstanding of 35
4) days sales outstanding of 35 to a
Days sales outstanding of 46

Question

Quizplus · Accepted Answer

Creditors prefer a higher quick ratio (1.2 over 0.8) as it indicates better liquidity. They also prefer a lower days sales outstanding (35 over 46) as it indicates quicker collection of receivables.

Creditors Would Prefer 1) a Quick Ratio of 1.2 to a Quick Ratio