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Question
The Quick Ratio of a company is 0.8 : 1. State whether the Quick Ratio will improve, decline or will not change in the following cases:
- Cash collected from Debtors ₹ 50,000.
- Creditors of ₹ 20,000 paid off.
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Solution 1
- No Change
- Decline
Solution 2
- The quick ratio will not change.
Reason: Cash (a quick asset) increases, but debts (also a quick asset) decrease by the same amount. The total quick assets stay unchanged, and there is no effect on current liabilities. - The quick ratio will decline.
Reason: The quick ratio will decline if cash (a quick asset) decreases while paying off current liabilities, reducing overall quick assets.
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| Inventory at the end | ₹ 50,000 |
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| Current assets | ₹ 8,00,000. |
| Quick ratio is | 1.5: 1 |
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Cost of goods sold =____.
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| (₹) | |
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| A | B | C | D | E | F | G | |
| 1 | Sales in ₹ | ||||||
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| 5 | S3 | 9,600 | 8,400 | 9,200 | 9,500 | 36,700 | ?? |
| 6 | S4 | ?? | 7,600 | 8,000 | 12,000 | ||
| 7 | Total | ||||||
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