The quick ratio is measured as:
A)current assets divided by current liabilities.
B)current assets minus inventory, divided by current liabilities.
C)current assets minus inventory minus current liabilities.
D)cash on hand plus current liabilities, divided by current assets.
E)current liabilities divided by current assets, plus inventory.

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, is a measure of a company's ability to meet its short-term obligations without relying on the sale of inventory. It is calculated by subtracting inventory from current assets and then dividing the result by current liabilities. Therefore, option B (current assets minus inventory, divided by current liabilities) is the correct choice for measuring the quick ratio.

The Quick Ratio Is Measured As