Which of the following is considered to be a more stringent measure of a company's ability to pay its current liabilities than the current ratio?
A)accounts payable
B)quick ratio
C)liquidity ratio
D)collection period

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, is considered to be a more stringent measure of a company's ability to pay its current liabilities than the current ratio as it only considers the most liquid assets (cash, marketable securities, and accounts receivable) relative to current liabilities, excluding inventory and prepaid expenses. Therefore, it provides a more conservative picture of a company's short-term liquidity position.

Which of the Following Is Considered to Be a More