The quick ratio measures a retailer's ability to _____.

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid test ratio, measures a retailer's ability to cover short-term liabilities with its most liquid assets, such as cash, marketable securities, and accounts receivable. The quick ratio excludes inventory, which may not be easily converted to cash in the short term. Therefore, the quick ratio provides a more conservative measure of a retailer's liquidity than the current ratio, which includes inventory. The quick ratio is important for assessing a retailer's ability to pay off its immediate debts without relying on inventory sales or other long-term sources of funds. Options A, B, and D are not relevant to the quick ratio.

The Quick Ratio Measures a Retailer's Ability to _____