The Quick Ratio

question 83

Multiple Choice

The quick ratio:

• A)Is computed by dividing current assets by current liabilities.
• B)Is always higher than the current ratio.
• C)Cannot be higher than the current ratio.
• D)May be higher or lower than the current ratio.

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Definitions:

Balance Sheet

a financial statement that provides a snapshot of a company's financial position at a particular point in time, detailing assets, liabilities, and equity.

Income Statement

A report detailing income and outgoings of a business for a set time frame, culminating in a profit or deficit.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt from its operating earnings.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.