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In Which of the Following Ways Does the Quick Ratio

Question 132

Multiple Choice

In which of the following ways does the quick ratio differ from the current ratio?


A) The quick ratio represents the amount of cash on hand instead of the total current assets.
B) The quick ratio excludes inventories and accounts receivable from the numerator of the fraction.
C) The quick ratio more strictly measures a company's ability to pay its current obligations.
D) The quick ratio signals the need to liquidate short-term investments when it drops below 2.0.

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