Why Might a Firm Use the Quick Ratio Instead of the Current

question 139

Multiple Choice

Why might a firm use the quick ratio instead of the current ratio in its liquidity analysis?

• A)It wants to target long-term debt instead of short term debt.
• B)Its accounts receivable are greater than its cash.
• C)Its inventory is not very liquid.
• D)It considers the cash flow amount in the quick ratio more important than the other liquidity ratios.
• E)Its notes receivable are greater than its cash.