Question

Quick ratio is calculated by using the following formula ___________________.

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

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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