header bg

Scan QR code or get instant email to install app

Question:

While analyzing HMS Inc., Fred Browne notes that the company's liquidity as measured by its quick ratio has decreased over time while its current liabilities have remained constant. This could be explained by:

A a decrease in accounts receivable.
explanation

The quick ratio is defined as: (cash + marketable securities + accounts receivable) / current liabilities. If current liabilities have remained constant, cash, marketable securities, or accounts receivable must have decreased. Inventory is not included in the quick ratio.

Comments

Leave a Reply

Your email address will not be published.

*