A quick ratio that is about equal to the current ratio indicates that
A)inventories represent a large portion of current assets.
B)the company has a low inventory turnover.
C)inventories represent a small portion of current assets.
D)the company has a high inventory turnover.

Question

Quizplus · Accepted Answer

A quick ratio that is about equal to the current ratio indicates that inventories represent a small portion of current assets. This means that the company has relatively low inventory levels and a higher proportion of other current assets such as cash and accounts receivable. This can be seen as a positive sign in terms of liquidity and efficiency.

A Quick Ratio That Is About Equal to the Current