Question

What will be the impact of ‘B/R received from debtors’ on a Quick Ratio of 1 : 1?

Answer 1

When Bills Receivable are received from debtors with a Quick Ratio of 1 : 1, the quick ratio remains unchanged. This is because the receipt of B/R raises rapid assets (such as cash or receivables), while current obligations remain unchanged. The increase in quick assets is countered by a comparable decrease in accounts receivable; therefore, the total quick ratio remains constant at 1 : 1, as both the numerator (quick assets) and the denominator (current liabilities) are proportionally unaffected.