Which of the following is most characteristic of the quick ratio?

Question

Quizplus · Accepted Answer

The quick ratio (also known as the acid test ratio) measures a company's ability to pay its short-term liabilities with its most liquid assets (such as cash and marketable securities). Therefore, the quick ratio is larger when a company's assets are more liquid, making option D the correct answer. Option A is false because the quick ratio is typically smaller than the current ratio since it does not consider inventory, which is considered a less liquid asset. Option B is false because the quick ratio increases when a company's assets become more liquid. Option C is false because the quick ratio is not affected by the ratio of cash sales to credit sales.

Which of the Following Is Most Characteristic of the Quick