Select the ratio that each statement below most properly satisfies.
-A measure that compares only the most liquid assets to current liabilities
A)Dividend yield ratio
B)Current ratio
C)Debt ratio
D)Return on common stockholders' equity ratio
E)Times-interest-earned ratio
F)Quick ratio
G)Debt-to-equity ratio
H)Dividend payout ratio
I)Price-earnings ratio

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet short-term liabilities with its most liquid assets, such as cash and accounts receivable. This ratio only considers the most liquid assets and excludes inventory, which usually takes longer to sell and convert into cash. Therefore, the quick ratio is a more conservative measure of liquidity than the current ratio.

Select the Ratio That Each Statement Below Most Properly Satisfies