Teaching Current and Quick Ratios Rules of Thumb
AIR Newsletter: Accounting Instructors' Report
This paper critiques the teaching of the 2:1 and 1:1 rules of thumb for the current and quick ratios, respectively, in introductory accounting courses. These ratios are calculated for 38 industries and tested for significant differences from the rules of thumb. Of the 38 industries examined, 20 had current and quick ratios that were significantly different from the rules of thumb. The paper includes tables suitable for distribution to students to promote discussion about using industry averages rather than solely relying on rules of thumb when analyzing the financial position of a company.
slabaugh, pollock, schmelzie, accounting, instructors, instruction, quick ratios
Michael D. Slaubaugh, Kathy S. Pollock, and George Schmelzie (2004).
Teaching Current and Quick Ratios Rules of Thumb. AIR Newsletter: Accounting Instructors' Report.2004 (Spring), N/A. GALE Cengage.