IIA IIA-CIA-Part2 Question Answer
Which of the following measures immediate short-term liquidity?
Current ratio
Profit margin
Quick ratio
Times interest earned
Current ratio (A) measures general liquidity (Current Assets ÷ Current Liabilities).
Quick ratio (C) (Quick Assets ÷ Current Liabilities) excludes inventory and prepaid expenses, giving a more immediate liquidity measure.
Profit margin (B) measures profitability, and times interest earned (D) measures solvency.
Thus, the best measure of immediate liquidity is the quick ratio (C).
TESTED 15 Feb 2026
Copyright © 2014-2026 ACE4Sure. All Rights Reserved