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    hbc4007's Avatar
    hbc4007 Posts: 1, Reputation: 1
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    #1

    Feb 6, 2012, 02:45 PM
    The quick ratio:
    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.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #2

    Feb 7, 2012, 04:22 AM

    A Is computed by dividing current assets by current liabilities.
    INCORRECT. This is used for current ratio
    B Is always higher than the current ratio.
    INCORRECT. Current assets include inventories.
    C Cannot be higher than the current ratio.
    CORRECT. If inventories are deducted from current assets, the liquid assets will be less than current assets, hence quick ratio will be lower than current ratio
    D May be higher or lower than the current ratio.
    INCORRECT. It cannot be higher than current ratio.
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