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.

Recognize and utilize specific and clear language in business writing.

Distinguish between connotative and denotative meanings of words.

Identify and avoid ethnically and racially biased language.

Apply strategies to maintain and protect goodwill in communication.

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Definitions:

Variable Costs

Costs that change in proportion to the level of activity or volume of goods produced.

Straight-Line Depreciation

An approach to apportion the cost of a tangible asset throughout its operational life in equal yearly sums.

Net Present Value

A financial calculation used to determine the value of a series of future cash flows by discounting them back to their value in today's dollars.

Required Rate Of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put their money into a particular security or project.