The ________ ratio is a conservative measure of a firm's liquidity and shows the extent to which a firm's most liquid assets cover its current liabilities.
A)current
B)quick
C)turnover
D)net profit

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, only includes a firm's most liquid assets (cash, marketable securities, and accounts receivables) and excludes inventory and prepaid expenses. This ratio is typically considered a more conservative measure of a firm's liquidity than the current ratio, since it only considers the assets that can be quickly converted into cash to cover current liabilities.

The ________ Ratio Is a Conservative Measure of a Firm's