Current Assets ₹4,00,000; Current Liabilities ₹2,00,000 and Inventory is ₹50,000. Quick Ratio will be :a.`2 : 1b.1.75 : 1c.`4 : 7d.`2.25 : 1
Question
Current Assets ₹4,00,000; Current Liabilities ₹2,00,000 and Inventory is ₹50,000. Quick Ratio will be :a.2 : 1b.1.75 : 1c.4 : 7d.`2.25 : 1
Solution
To calculate the quick ratio, we need to determine the quick assets and divide them by the current liabilities. Quick assets include current assets minus inventory.
Given: Current Assets = ₹4,00,000 Current Liabilities = ₹2,00,000 Inventory = ₹50,000
Quick Assets = Current Assets - Inventory = ₹4,00,000 - ₹50,000 = ₹3,50,000
Quick Ratio = Quick Assets / Current Liabilities = ₹3,50,000 / ₹2,00,000 = 1.75
Therefore, the Quick Ratio will be 1.75 : 1.
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