Series 79 practice questioneasyLiquidity Ratios
Which of the following ratios would be most useful in assessing a company's ability to meet its short-term obligations without relying on inventory sales?
- AQuick ratio✓ Correct answer
- BCurrent ratio
- CDebt-to-equity ratio
- DGross margin
Explanation
Why A — Quick ratio
The quick ratio excludes inventory, directly measuring liquidity based on the most liquid assets. The current ratio includes inventory, and the other ratios do not measure short-term liquidity.
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