Which financial ratio measures an organization’s ability to cover short-term operational liabilities using its most liquid current assets (excluding inventory)?

Explanation

• Quick Ratio formula: $text{Quick Ratio} = frac{text{Current Assets} – text{Inventory}}{text{Current Liabilities}}$.
• Excludes inventory because inventory is the least liquid current asset and cannot always be converted immediately to cash.
• Current Ratio includes total current assets divided by current liabilities.