A quick ratio that is high when compared to an industry average might mean the company may have excessive inventory levels or slow moving inventory items.

Question

Quizplus · Accepted Answer

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets and does not include inventory in its calculation. A high quick ratio indicates strong liquidity, not excessive or slow-moving inventory.

A Quick Ratio That Is High When Compared to an Industry