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 sells on a cash basis receives cash immediately, which means they have faster cash inflow and can support a lower quick ratio compared to a company selling on credit, which has slower cash inflow due to credit terms and payment collection time.

A Company That Sells Primarily on a Cash Basis Could