The current and quick ratios have two limitations.These ratios
A)emphasize the ineffectiveness of analysts' calculations and focus on liquid assets at a point in time instead of a period of time.
B)focus on cash instead of working capital,and they represent a point in time instead of covering a period of time.
C)focus on working capital instead of cash,and they represent a point in time instead of covering a period of time.
D)are ignored by most creditors and focus on working capital instead of cash.

Question

Quizplus · Accepted Answer

The current and quick ratios focus on working capital (current assets minus current liabilities) and liquid assets, respectively, rather than just cash. They also represent financial conditions at a specific point in time, not over a period, which can limit their usefulness in assessing a company's ongoing liquidity.

The Current and Quick Ratios Have Two Limitations