Inventories are excluded from which financial metric regarding current assets?

The quick ratio, often referred to as the acid-test ratio, measures a company’s ability to meet its short-term obligations with its most liquid assets. It specifically excludes inventories from its calculations because inventories are not as readily convertible to cash compared to cash and cash equivalents, as well as receivables. The quick ratio is designed to give a more conservative view of liquidity under the premise that inventory can take time to sell and might not be easily converted to cash during periods of financial distress.

In contrast, the current ratio includes all current assets, including inventories, and provides a broader perspective on a company's ability to cover its short-term liabilities. The liquidity ratio is a similar measure to the current ratio. The debt-to-equity ratio, on the other hand, assesses a company’s financial leverage and is unrelated to current asset metrics.

Thus, excluding inventory allows the quick ratio to focus solely on the most liquid assets, giving stakeholders a clear view of a company’s immediate financial health.