CBSE (Arts) Class 12CBSE
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Liquidity Ratios

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Current Ratio: `"Current Assets"/"Current Liabilities"`

Current Assets = Current Investments + Inventories (excluding Loose Tools and Spare Parts) + Trade Receivables + Cash and Bank Balance + Short-term Loans and Advances + Other Current Assets

Current Liabilities = Short term borrowings + Trade payables + Other Current Liabilities + Short term Provisions.

Quick Ratio / Liquid Ratio : `"Quick Assets"/"Current Liabilities"`

Or

`"All Current Assets- Inventories(excluding Loose Tools and Spare Parts)- Prepaid Expenses"/"Current Liabilities"`

Or

`"Liquid Assets"/"Current Liabilities"`

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