The quick ratio is a more accurate measure of a company's liquidity than the current ratio.

Question

Quizplus · Accepted Answer

The quick ratio (also known as acid-test ratio) is a more conservative measure of liquidity than the current ratio as it only includes the most liquid current assets (cash, marketable securities, and accounts receivable) in the numerator, whereas the current ratio includes all current assets. This means that the quick ratio provides a better indication of a company's ability to meet its short-term liabilities with its most liquid assets.

The Quick Ratio Is a More Accurate Measure of a Company's