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Which of the following is the most desirable quick ratio: a. 1.80 b. 1.50 c. 2.20...

Which of the following is the most desirable quick ratio:

a. 1.80

b. 1.50

c. 2.20

d. 1.95

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Answer #1

The correct answer is C. 2.20

Ideal quick ratio is 1:1

Quick ratio can be calculated by current asset÷current liabilities

Current will include all current asset except inventory and prepaid expenses

The ideal ratio is 1:1 but higher the ratio will be desirable because higher ratio shows the better position of company in order to pay it's current liability. Ratio is 2.20 it means company has 2.20 $ current assets to pay 1$ liability.

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