When comparing the current ratio to the quick ratio:
A)The current ratio will be greater or equal.
B)The quick ratio will always be greater.
C)The quick ratio is sometimes greater and sometimes less than the current ratio.
D)They always will be the same.

Question

Quizplus · Accepted Answer

The current ratio includes all current assets (including inventory), while the quick ratio excludes inventory. Since inventory is a current asset, removing it (as the quick ratio does) will either decrease the ratio or leave it unchanged if there is no inventory, making the current ratio always greater than or equal to the quick ratio.

When Comparing the Current Ratio to the Quick Ratio