A quick ratio that is much smaller than the current ratio indicates that
A) inventories represent a large portion of current assets.
B) the company has a low inventory turnover.
C) the company has a high inventory turnover.
D) inventories represent a small portion of current assets.

Question

Quizplus · Accepted Answer

A quick ratio much smaller than the current ratio suggests that inventories, which are excluded from the quick ratio, make up a large portion of current assets.

A Quick Ratio That Is Much Smaller Than the Current