The quick ratio does not include inventory, prepaid expenses, or supplies in its calculation. Current ratio: The current ratio formula is current assets divided by current liabilities, but it includes all current assets, not just liquid assets.
What Is Included in the Quick Ratio? The quick ratio is the value of a business's “quick” assets divided by its current liabilities. Quick assets include cash and assets that can be converted to cash in a short time, which usually means within 90 days.
Prepaid expenses are excluded from the quick ratio, since this line item represents expenditures that have already been made; therefore, prepaid expenses cannot be liquidated to pay for any current liabilities.
Quick assets: The sum of a company's cash, cash equivalents (i.e., money market accounts, certificates of deposits, savings accounts, Treasury bills that mature within 90 days), marketable securities (publicly traded stocks and bonds, commercial paper) and receivables.
Inventories and prepaid expenses are not quick assets because they can be difficult to convert to cash, and deep discounts are sometimes needed to do so.
Inventory is not included in the quick ratio because many companies, in order to sell through their inventory in 90 days or less, would have to apply steep discounts to incentivize customers to buy quickly.
The correct answer is debentures, long-term loans, bonds payable. Explanation: Quick liabilities are the liabilities that are meant to be paid quickly. Non current liabilities include debentures, long-term loans, bonds payable, deferred tax liabilities, long-term lease obligations, and pension benefit obligations.
The quick ratio, also known as the acid-test ratio, measures the ability of a company to pay all of its outstanding liabilities when they come due with only assets that can be quickly converted to cash. These include cash, cash equivalents, marketable securities, short-term investments, and current account receivables.
The correct option is (B) Inventory Turnover Ratio.
Given inventory of 24,000, other current assets of 12,000 and current liabilities of 20,000, the acid test (quick ratio) will be: Which of the following is not included in current assets....Q.Which of the following is not included in quick assets?A.DebtorsB.StockC.Cash at bankD.Cash in hand1 more row
Quick assets are therefore considered to be the most highly liquid assets held by a company. They include cash and equivalents, marketable securities, and accounts receivable. Companies use quick assets to calculate certain financial ratios that are used in decision making, primarily the quick ratio.
Answer and Explanation: The answer is (c) Bonds.