A deficiency of standard measures of liquidity is that the measures:
A) ignore a firm's reserve borrowing capacity.
B) fail to include accounts receivable as an asset.
C) give inventories equal weighting in the quick ratio.
D) do not include the current portions of long-term debt.

Question

Quizplus · Accepted Answer

Standard measures of liquidity, such as the current ratio and quick ratio, do not take into account a firm's reserve borrowing capacity. This means that even if a company has access to additional funds through borrowing or other means, it may appear less liquid than it actually is based on these measures alone.

A Deficiency of Standard Measures of Liquidity Is That the Measures