A company that sells primarily on a cash basis could support a lower quick ratio because their cash inflow is faster than a company selling on credit.

Question

Quizplus · Accepted Answer

A company that has a faster cash inflow, such as a company that sells primarily on a cash basis, can support a lower quick ratio because they have access to cash more quickly than a company that sells on credit. Therefore, they may not need as many liquid assets (such as cash and equivalents) to cover short-term obligations.

A Company That Sells Primarily on a Cash Basis Could