The numerical value of the quick ratio can never exceed the numerical value of the current ratio.

Question

The numerical value of the quick ratio can never exceed the numerical value of the current ratio.​

Quizplus · Accepted Answer

The quick ratio, also known as the acid-test ratio, is a more conservative measure of liquidity as it only considers the most liquid assets (cash, cash equivalents, and accounts receivable). The current ratio, on the other hand, takes into account all current assets including inventory and prepaid expenses. Since the quick ratio is a subset of the current ratio, it can never be higher than the current ratio.

The Numerical Value of the Quick Ratio Can Never Exceed