The Quick Ratio Differs from the Current Ratio in That

question 96

Multiple Choice

The quick ratio differs from the current ratio in that it

• A) represents the amount of cash on hand instead of the amount of working capital.
• B) is a stricter test of a company's ability to pay its current debts as they are due.
• C) excludes inventories and accounts receivable from the numerator of the fraction because of obsolescence and possible default on payment.
• D) is more difficult to calculate.

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Definitions:

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