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Question
Calculate quick ratio: Total current liabilities ₹ 2,40,000; total current assets ₹ 4,50,000; Inventories ₹ 70,000; Prepaid Expenses ₹ 20,000
Sum
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Solution
Quick Ratio = `"Quick assets"/"Current liabilities"`
Quick assets = Current Assets – Inventories & Prepaid exps.
= 4,50,000 – (70,000 + 2000)
= Rs. 3,60,000
Quick Ratio = `360000/240000 =`
Quick Ratio = 1. 5 : 1
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