Which of the Following Statements Is True About the Quick

question 60

Multiple Choice

Which of the following statements is true about the quick ratio?

• A) The quick ratio does not include inventory as part of the numerator.
• B) The quick ratio does not include accounts payable in the denominator.
• C) The quick ratio is an approximation of the debt ratio.
• D) The quick ratio reflects the dividends paid by a company.

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Definitions:

Comparative Financial Statements

Financial statements that present financial information for different periods or dates side by side to facilitate comparison.

Corporations

Are legal entities that are separate and distinct from their owners. They have the ability to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.

Vertical Analysis

A method of financial statement analysis in which each entry is listed as a percentage of another item, typically used for income statements where entries are compared to total sales.

Total Assets

The sum of all resources owned by a company, valued according to accounting principles, including both current and non-current assets.