Question

Can Current Ratio and Quick Ratio be same at any moment?

Answer 1

Yes, the Current Ratio and Quick Ratio can be the same at any moment, but this occurs only when there are no prepaid expenses and inventory in the business. The Current Ratio assesses a company’s capacity to satisfy its short-term obligations using current assets such as cash, receivables, inventories, and prepaid expenses. The Quick Ratio, on the other hand, is a more stringent liquidity metric that excludes inventory from current assets since inventory may be difficult to convert into cash in the short term.