‘Quick’ assets, as used in the quick ratio, does not include:Group of answer choicesaccounts payableaccounts receivablecashmarketable securities
Question
‘Quick’ assets, as used in the quick ratio, does not include:Group of answer choicesaccounts payableaccounts receivablecashmarketable securities
Solution
The term 'Quick' assets, as used in the quick ratio, does not include:
- Accounts Payable: This is because accounts payable are amounts a company owes because it purchased goods or services on credit from a supplier or vendor. They are liabilities, not assets, and therefore are not included in the quick ratio.
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. The quick assets included in this ratio are:
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Accounts Receivable: These are amounts owed to the company by its customers for goods or services delivered or used but not yet paid for.
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Cash: This includes physical cash and cash equivalents that can be readily converted to a known amount of cash.
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Marketable Securities: These are very liquid securities that can be converted into cash quickly at a reasonable price.
So, the answer to your question is accounts payable.
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