Bayt.com

Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

Firm's current assets include cash, debtors and stock. If its inventories increased by 10% and its current ratio remains same; quick ratio will ____?

Accounting Financial Analysis Financial Statements
user-image
Question added by Shaikh Muhammad Yousuf , Manager Accounts , Al Wahdania Group of Companies
Date Posted: 2016/02/07
Upvote (0) Views (1) Followers (2) Answers (2) Report Question
Write an Answer
Register now or log in to answer.
Mahmoud Hamid
by Mahmoud Hamid , Finance Manager , Experts

If Current Ratio = cash + Inventory / Current Liability = /=1.5

When we purchase inventory by cash, the ration will become = / =1.5 (no change)

That means Quick Ratio we become/=0.4 (decrease)

Junaid Talaat Waheed Khan
by Junaid Talaat Waheed Khan , Corporate Affairs Manager , Pakistan International Airlines Corporation Limited (PIA)

'Decrease'

 

Quick Ratio = (Current Assets - Inventories) / Current Liabilities

 

Current Ratio = Current Assets / Current Liabilities

Write Your Answer
More Questions Like This