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Which ratio is used to find the liquidation at reported amount?

1) Current ratio
2) Quick ratio
3) Debt ratio
4) Profit margin ratio

User RichardK
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1 Answer

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Final answer:

The quick ratio is used to find the liquidation at reported amount, as it measures a company's ability to cover short-term obligations with liquid assets. Other ratios like the current ratio, debt ratio, and profit margin ratio serve different purposes related to liquidity, financing, and profitability, respectively.

Step-by-step explanation:

To find the liquidation at reported amount, the quick ratio is used among the options given. The quick ratio, also known as the acid-test ratio, is a financial metric that measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated by taking the sum of cash, marketable securities, and accounts receivable divided by current liabilities. It does not include inventory in the count as inventory is not as quickly convertible to cash and thus may not be available for immediate liquidation.

Other ratios listed, such as the current ratio, debt ratio, and profit margin ratio, have different focuses. The current ratio considers all current assets including inventory when measuring liquidity, the debt ratio measures the proportion of a company's assets financed by debt, and the profit margin ratio is concerned with profitability, not liquidity.

User Gerik
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