Investments, tenth edition

2011

2012

2013

2013 Industry Average

1.46

1.17

.97

2.0

    This represents an unfavorable time trend and poor standing relative to the indus-

try. This troublesome pattern is not surprising given the working capital burden 

resulting from GI’s subpar performance with respect to receivables and inventory 

management.  

   2.     Quick  ratio:       (Cash  1  marketable  securities  1  receivables)/current  liabilities.  This 

ratio is also called the    acid  test  ratio.      It has the same denominator as the current 

ratio, but its numerator includes only cash, cash equivalents, and receivables. The 

quick ratio is a better measure of liquidity than the current ratio for firms whose 

inventory is not readily convertible into cash. GI’s quick ratio shows the same dis-

turbing trends as its current ratio: