Even though Firm A's current ratio exceeds that of Firm B,Firm B's quick ratio might exceed that of A.However,if A's quick ratio exceeds B's,then we can be certain that A's current ratio is also larger than B's.

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Quizplus · Accepted Answer

This question can be answered by thinking carefully about the ratios: Demonstration that the first sentence is true: 11ea856c_8bed_7b5b_9aec_21e5366348d4_TB1222_00 11ea856c_8bed_7b5c_9aec_efc0071c2a92_TB1222_00 Demonstration that the second sentence is false: 11ea856c_8bed_a26d_9aec_9715077d27b4_TB1222_00 11ea856c_8bed_a26e_9aec_f3b7c5daabf9_TB1222_00 The key is inventory,which is in the CR but not in the QR.The firm with more inventory can have the higher CR but the lower QR.

Even Though Firm A's Current Ratio Exceeds That of Firm