The quick ratio measures a retailer's ability to ________.
A) raise capital with a stock offering
B) earn a satisfactory profit
C) cover short-term debt
D) control operating expenses

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid test ratio, is a measure of a company's ability to cover its short-term debt obligations with its most liquid assets. This ratio does not include inventory in its calculation, as inventory can be difficult to turn into cash quickly if needed. Therefore, a high quick ratio indicates that a retailer has sufficient liquid assets to cover its short-term debt obligations.

The Quick Ratio Measures a Retailer's Ability to ________