Which of the Following Is True About the Quick Ratio

question 33

Multiple Choice

Which of the following is true about the quick ratio?

• A) The quick ratio is calculated by dividing the least liquid of current assets by current liabilities.
• B) Service firms that tend not to carry too much inventory will see significantly higher quick ratios than current ratios.
• C) Inventory, being not very liquid, is subtracted from total current assets to determine the most liquid assets.
• D) Quick ratios will tend to be much larger than current ratio for manufacturing firms or other industries that have a lot of inventory.

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