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Question

Quick ratio is calculated by using the following formula ___________________.


A
Cash+nearcash+debtorsInventoriesCurrentliabilities
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B
Cash+debtorsCurrentliabilities
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C
CashCurrentliabilities
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D
Cash+nearcash+debtorsCurrentassets
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Solution

The correct option is A $$\cfrac { Cash+near  cash+debtors - Inventories }{ Current\quad liabilities } $$
Quick ratio is calculated by dividing liquid current assets by total current liabilities. Liquid current assets include cash, marketable securities and receivables. Cash includes cash in hand and cash at bank.

Accountancy

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