Why Is the Quick Ratio Considered by Some to Be

question 38

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 omits 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:

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Supplier Activity Costs

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