Question

why is inventory excluded from the quick ratio? it is included in the quick ratio. it is not liquid enough. it is too liquid.

Explanation:

The quick ratio measures a company's ability to pay short - term liabilities with its most liquid assets. Inventory is excluded from the quick ratio because it is not as liquid as assets like cash, accounts receivable, etc. Converting inventory into cash often takes time (e.g., through sales, which may involve finding buyers, negotiating prices, etc.), so it does not have the quick convertibility that the quick ratio aims to measure. The option "It is included in the quick ratio" is incorrect as inventory is excluded. The option "It is too liquid" is also incorrect as inventory is not highly liquid.

Answer:

B. It is not liquid enough.