The Quick Ratio Differs from the Current Ratio

question 41

Multiple Choice

The quick ratio differs from the current ratio:

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

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Definitions:

Heavy Debt Burdens

Refers to situations where individuals, companies, or countries owe large amounts of money, making it difficult to manage finances or invest for the future.

Little or No Investment

Situations or ventures that require minimal to no financial outlay to start or maintain.

Exchange Controls

Governmental restrictions on the trade of currencies and the movement of capital across countries, aiming to stabilize economies.