The Quick Ratio Differs from the Current Ratio

question 5

Multiple Choice

The quick ratio differs from the current ratio

• A) Because liabilities are divided by current assets
• B) Because prepaid expenses and inventory are excluded
• C) Because it measures profitability
• D) Because it excludes short-term investments
• E) Because prepaid expenses and inventory are excluded and because it measures profitability

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Definitions:

Company Expense

A financial cost incurred in the course of business operations.

Rewards

Benefits, compensation, or acknowledgment provided to someone for their work, achievements, or behavior.

Punishments

The imposition of a penalty as retribution for an offense or undesirable behavior.

Adults

Individuals who have reached the age of maturity, usually considered to be 18 or older, and are recognized as fully developed persons both physically and mentally.