This question-specific review guide is tied to the answer reasoning for a PracticeTestVault item. Use it after you answer the question so the review stays focused on what the prompt actually tested.
What this question is testing
Objective: Financial ratios
Prompt focus: A company has current assets of 600,000 dollars, inventory of 200,000 dollars, and current liabilities of 250,000 dollars. What is the quick ratio?
Why the correct answer works
1.6
Correct. Quick assets equal 600,000 minus 200,000, which is 400,000, divided by 250,000 equals 1.6.
Why the tempting wrong answer fails
2.4 is the current ratio of 600,000 divided by 250,000, which fails to remove inventory.
Plain-language takeaway
The quick ratio excludes inventory from current assets and divides the result by current liabilities.
Simple analogy
Think of financial ratios like following a short checklist: identify the clue, confirm the rule, and then make the move that fits this exact scenario.
How to review it before a retake
- Underline the command word and name what the question is asking before rereading the choices.
- Compare the correct answer against the closest distractor and write the exact detail that separates them.
- Retest this objective with a fresh question without looking at the rationale first.