Read the following information given in the financial statements of the company and answer the following question.

What will be the quick ratio?

1.25:1

The correct answer is option 2- 1.25:1.

Liquid assets =  Current assets - inventories - income tax paid in advance
                      = 7,20,000 - 3,90,000 - 30,000
                      = ₹3,00,000

Current liabilities = Trade payables + rent payable + dividend payable + bank overdraft + provision for tax
                           = 1,20,000 + 10,000 + 30,000 + 25,000 + 55,000
                           = ₹2,40,000

Quick ratio = Liquid asset/ current liabilities
                 = 3,00,000/2,40,000
                 = 1.25:1