Which of the following is true regarding the quick ratio Includes inventory in current assets A...

Which of the following is true regarding the quick ratio

		Includes inventory in current assets
		A lower ratio means greater liquidity
		The quick ratio should be lower than the current ratio if a firm holds positive levels of inventory
		All are true
		None of the above

Solutions

Expert Solution

The true statement is:-

c) The quick ratio should be lower than the current ratio if a firm holds positive levels of inventory

As the quick ratio excludes inventory from the calculation, so the higher the level of inventory, the lower the quick ratio will be from current ratio.

jeff jeffy answered 2 years ago

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