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Question
Quick Ratio falls under the group of ______.
Options
Liquidity Ratios
Solvency Ratios
Activity Ratios
Profitability Ratios
MCQ
Fill in the Blanks
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Solution
Quick Ratio falls under the group of Liquidity Ratios.
Explanation:
Liquidity Ratios measure a company’s ability to fulfil its short-term financial obligations as and when they fall due.
The Quick Ratio (also known as the Acid-Test or Liquid Ratio) falls under this group because it refines the analysis by measuring the company’s ability to pay current liabilities immediately using its most liquid assets (excluding Inventory and Prepaid Expenses, which take time to convert into cash).
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