alleryWhich current assets are excluded when computing the quick ratio?
ACash and marketable securities
BInventory and prepaid items
CAccounts receivable and cash
DMarketable securities and receivables
Answer & Solution
Correct answer: B. Inventory and prepaid items
1. Quick assets include cash, accounts receivable, and marketable securities.
2. They exclude inventory and prepaid items, which take too long to convert to cash.
3. Therefore inventory and prepaid items are removed.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.3.4 "Quick Ratio", p.295_
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