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Business, 22.04.2020 01:03 1Angel2Got3Brains
If a firm is having financial difficulty, it typically begins to pay its accounts payable more slowly and to borrow from the bank—both of which will increase its current causing a decline in the current ratio. The quick ratio is a measure of a firm's ability to pay off obligations without relying on the sale of , which are typically the least liquid of a firm's current assets. Its equation is:
Quick, or acid ratio (current assets - inventories)/current liabilities
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