For a retail firm the quick asset ratio will always be:
A)higher than the current ratio
B)lower than the current ratio
C)the same as the current ratio
D)sometimes higher and sometimes lower than the current ratio

Question

Quizplus · Accepted Answer

The quick ratio only considers the most liquid assets such as cash, receivables and inventory, and excludes less liquid items such as inventory. For a retail firm, inventory is usually a large component of their current assets, so excluding it will result in a lower quick asset ratio compared to the current ratio.

For a Retail Firm the Quick Asset Ratio Will Always