ABC Ltd. is in the business of selling computers and computer accessories from Outlets located in Chandigarh. They had planned to open a fourth outlet but due to the lockdown, they decide to wait till the situation normalizes. Lockdown had hit the business badly and the main reason was that the company did not have an Online Selling Platform. The management of a company is hardcore selling professionals and did not have much knowledge of finance and accounting. As the business was in a downward trend, they wanted to assess their financial position so that they can plan in the light of fresh facts. They were particularly interested to know whether the company is in a position to meet its short-term financial commitments. A finance expert was engaged for this purpose. The accountant supplied the following information to the expert:

What is the objective of the company in calculating the quick ratio?

To assess the ability of the firm to meet its current liabilities immediately.

The quick ratio measures a company's ability to quickly convert liquid assets into cash to pay for its short-term financial obligations. A positive quick ratio can indicate the company's ability to survive emergencies or other events that create temporary cash flow problems.