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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

Respuesta :

adioabiola

Answer:

Liabilities; short-term; inventories; quick ratio

Explanation:

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 liabilities causing a decline in the current ratio.

The quick ratio is a measure of a firm's ability to pay off short-term obligations without relying on the sale of inventories which are typically the least liquid of a firm's current assets.

Its equation is quick ratio.

The liquidity position of a Firm would be satisfactory, if it is able to meet it's current obligations when they become due.

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