The quick ratio is the same as current ratio except it does not consider
A)cash
B)accounts receivable
C)prepaid items
D)inventories

Question

Quizplus · Accepted Answer

The quick ratio (also known as the acid test ratio) is a liquidity ratio that measures a company's ability to use its most liquid assets to pay off its current liabilities. It is calculated by subtracting inventories from current assets and dividing the result by current liabilities. The quick ratio only considers assets that can be quickly and easily converted into cash, such as accounts receivable and prepaid items, but it excludes inventories because they may take longer to sell or may become obsolete. Therefore, the correct answer is D, inventories.

The Quick Ratio Is the Same as Current Ratio Except