The rule of thumb for the quick ratio is 1:1.When would a quick ratio below this threshold not necessarily be a concern for a company?
A)When inventories are high
B)When accounts receivable balances are high
C)When cash flows are steady and reliable
D)None of these choices are correct

Question

Quizplus · Accepted Answer

A quick ratio below 1:1 might not be a concern if a company has steady and reliable cash flows, as it indicates the company can still meet its short-term liabilities without needing to liquidate assets quickly.

The Rule of Thumb for the Quick Ratio Is 1:1