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A. Current ratio to a greater degree than the quick ratio.
B. Quick ratio to a greater degree than the current ratio. .
C. Current and quick ratio to the same degree.
D. Current ratio but not the quick ratio.
B. Quick ratio to a greater degree than the current ratio.
As Current Assets used in the calculation of Current and Quick ratio are different.
So, effect will also be different.
thats a tricky one as most of us will calculate the difference on both ratio on a numerical basis and this will leads to answer C: Current and quick ratio to the same degree which is a huge mistake the key here is to calculate the degree( the percentage)
hence B. Quick ratio to a greater degree than the current ratio. AND ALWAYS WILL BE .although there is some assumption to be considered like whether the current and quick ratio were both greater than the current liabilities after and before the transaction but it does not matter in both cases the quick ratio will respond to the change grater than the current ratio
Current Ratio is Greater the Quick ratio
answer is C , current and quick ratio to the same degree
B. Quick ratio to a greater degree than the current ratio
as The numerators of the quick and current ratios are decreased when cash is expended. Early payment of a long-term liability has no effect on the denominator (current liabilities). Since the numerator of the quick ratio, which includes cash, net receivables, and marketable securities, is less than the numerator of the current ratio, which includes all current assets, the quick ratio is affected to a greater degree.
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