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Question:

If firms Acme and Butler have the same amount of sales and equal quick ratios, but Acme’s receivables turnover is higher, it is most likely that:

A Butler has a lower cash ratio than Acme.
explanation

Given that they have the same amount of sales and Acmes receivables turnover (sales/average accounts receivable) is higher, Acme must have lower average accounts receivable than Butler. Given that they have equal quick ratios, subtracting accounts receivable from the numerators of the quick ratios of both firms will produce a cash ratio for Butler that is lower than the cash ratio for Acme.

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