Which of the following is correct regarding the quick ratio?

Question

Quizplus · Accepted Answer

An acceptable quick ratio depends on the industry the company is in. Some industries may have higher inventory turnover rates and therefore a lower quick ratio is acceptable, while others may have longer cash conversion cycles and require a higher quick ratio for safety. Option A is incorrect as a lower quick ratio indicates a company has less ability to pay its liabilities quickly. Option B is incorrect as the desired quick ratio can vary by industry and company. Option C is incorrect as a quick ratio that is too high may indicate the company's resources are not being used efficiently.

Which of the Following Is Correct Regarding the Quick Ratio