How is the quick ratio correctly calculated?

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated using only the most easily converted assets, namely cash, marketable securities, and receivables, due to their immediacy in converting to cash when needed.

The correct answer encompasses the formula: (Cash + marketable securities + receivables) / current liabilities. This formula clearly highlights that it is focusing on liquid assets that can quickly cover current liabilities, providing a more stringent assessment of liquidity than the current ratio, which includes all current assets.

This calculation is crucial for stakeholders, such as investors and creditors, as it helps assess the financial health of a company without relying on inventory, which might not be easily converted to cash.