Which of the following is included in the numerator of the Quick Ratio?

• A. Cash + Marketable Securities + Receivables
• B. Cash
• C. Marketable Securities
• D. Receivables

Answer: (A)

The Quick Ratio measures a company’s ability to meet short-term obligations using assets that can be quickly converted to cash. Because it excludes inventory, it focuses on highly liquid assets that can cover current liabilities right away. The numerator should include cash, marketable securities, and receivables because these are the assets most readily turned into cash in the near term. Cash is the most liquid, marketable securities can be sold quickly with little risk of loss, and receivables represent amounts owed by customers that are typically collected soon.

Inventory is not included because converting it to cash often requires time and may involve price concessions, which would defeat the purpose of a rapid liquidity measure. Therefore, the numerator is cash plus marketable securities plus receivables, reflecting the assets that can promptly cover current liabilities.