OSG Sales Ltd. are in the business of retailing household items from their 4 Sale Outlets located in the same city Chandigarh. Considering the current situation, the management decided to set up an Online Platform and Delivery System. They got the financial position of the company assessed. The expert computed various accounting ratios to assess the financial position. Since the ratios were based on current financial data they decided to consider situations that could impact the financial position and therefore, the ratios so that they can have a sound business model without facing financial crises. plan afresh. They were particularly interested to assess the capital that may be required to be infused for the business. The Current Ratio was determined to be 2 : 1.

In calculating the quick ratio, which items are excluded from current assets?

Inventory and prepaid expenses

Quick assets are defined as those assets which are quickly convertible into cash. While calculating quick assets we exclude the inventories at the end and other current assets such as prepaid expenses, advance tax, etc., from the current assets