What will be the quick ratio of the company if its current assets are ₹29,745 and the current ratio is 1.5:1, and inventories are ₹8,827?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 1.05:1.
* Current ratio = current assets / current liabilities
1.5:1 = 29,745/ current liabilities
Current liabilities = 29,745/1.5
= ₹19,830
* Liquid assets = current asset - inventory
= 29,745 - 8,827
= ₹20,918
Quick ratio = quick assets / current liabilities
= 20,918/19,830
= 1.05:1