The Quick Ratio Differs from the Current Ratio in That

question 46

Multiple Choice

The quick ratio differs from the current ratio in that it

• A)represents the amount of cash on hand instead of the total current assets.
• B)excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible collection problems.
• C)is a stricter measure of a company's ability to pay its current obligations.
• D)signals the need to liquidate short-term investments when it drops below 2.0.

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Definitions:

Bicarbonate Ions

Bicarbonate ions (HCO3-) act as a buffer in biological systems, helping to maintain pH balance in blood and other bodily fluids.

Carbonic Anhydrase

An enzyme that catalyzes the conversion of carbon dioxide and water into carbonic acid, playing a vital role in respiratory gas exchange and pH balance.

Carbonic Anhydrase Inhibitor

A class of pharmaceuticals that suppress the activity of carbonic anhydrase, thereby reducing fluid pressures in the eye, among other effects.

Carbonic Anhydrase

An enzyme that catalyzes the conversion of carbon dioxide and water to carbonic acid, playing a critical role in respiration and the acid-base balance in blood.