Why Is the Quick Ratio Considered by Some to Be

question 3

Multiple Choice

Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?

• A) The quick ratio more accurately reflects a firm's profitability.
• B) It leaves out the least liquid current asset from the numerator of the ratio.
• C) The current ratio does not include accounts receivable.
• D) It measures how "quickly" cash flows through the firm.

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Definitions:

Subcutaneous Injection

A method of administering medication under the skin into the fatty tissue layer between the skin and the muscle.

Stethoscope

A medical instrument used for listening to sounds produced within the body, particularly the heart and lungs, in order to diagnose conditions.

Body Sounds

The noises produced within the body that can be heard during a medical examination, such as heartbeats or lung sounds.

Examination Light

A focused light source used in medical settings to illuminate the examination area for clearer observation.