Which action can improve the quick asset ratio?

The quick asset ratio, also known as the acid-test ratio, is a measure of a company's short-term liquidity and ability to meet its immediate obligations without relying on inventory sales. This ratio is calculated using the formula: (Current Assets - Inventory) / Current Liabilities.

Encouraging debtors to pay their debts directly influences the company's liquid assets. When debtors settle their accounts, cash increases, thus enhancing current assets while leaving current liabilities unchanged. This immediate increase in liquid assets improves the quick asset ratio, reflecting a stronger position in terms of short-term financial health.

In contrast, increasing inventory levels would not improve the quick asset ratio because inventory is excluded from the calculation of this ratio. Reducing sales revenue has a negative impact on cash flow and could lead to reduced current assets over time, ultimately harming the liquidity position. Lastly, divesting profitable assets could reduce the current asset base, potentially leading to a lower ratio, unless those assets are truly non-liquid or not essential for immediate operations.