question archive Under what circumstances would the current ratio be the preferred measure of overall firm liquidity? Under what circumstances would the quick ratio be preferred?
Under what circumstances would the current ratio be the preferred measure of overall firm liquidity? Under what circumstances would the quick ratio be preferred?
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Under what circumstances would the current ratio be the preferred measure of overall firm liquidity? Under what circumstances would the quick ratio be preferred?
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The current ratio proves to be the better liquidity measure when all of the firm’s current assets are reasonably liquid. The quick ratio would prove to be the superior measure if the inventory of the firm is considered to lack the ability to be easily converted into cash.
