The Quick Ratio

question 27

Multiple Choice

The quick ratio

• A) does not include inventory as part of the numerator.
• B) does not include all current liabilities in the calculation.
• C) is a quick calculation of an approximation of the current ratio.
• D) includes prepaid expenses as part of the numerator.

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Definitions:

Constructive Trust

An equitable trust that is imposed in the interests of fairness and justice when someone wrongfully holds legal title to property.

Indemnification

A legal obligation to compensate for loss, damage, or liability incurred by another party.

Breach

The violation or breaking of a law, duty, or contractual obligation.

Specific Performance

A legal remedy in contracts law requiring a party to perform their obligations under a contract, rather than paying damages for breach.