The quick ratio is computed as _____.
A) quick assets divided by current liabilities
B) quick assets divided by current assets
C) current assets divided by stockholders' equity
D) current liabilities divided by current assets

Question

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, is computed by dividing quick assets by current liabilities. Quick assets are assets that can be easily converted into cash, such as cash, marketable securities, and accounts receivable, while current liabilities are obligations that are due within one year. The quick ratio measures a company’s ability to meet short-term obligations with its most liquid assets, and a higher quick ratio indicates a stronger liquidity position.

The Quick Ratio Is Computed as _____