The quick ratio differs from the current ratio:
A)Because it excludes short-term investments.
B)Because liabilities are divided by current assets.
C)Because it measures profitability.
D)Because prepaid expenses and inventory are excluded.
E)Because prepaid expenses and inventory are excluded and because it measures profitability.

Question

Quizplus · Accepted Answer

The quick ratio excludes prepaid expenses and inventory from current assets to measure a company's ability to meet short-term obligations without relying on the sale of inventory.

The Quick Ratio Differs from the Current Ratio