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Question
Calculate Quick Ratio (up-to two decimal places) from the following information:
| Particulars | (₹) |
| Total Current Assets | 90,000 |
| Working Capital | 60,000 |
| Prepaid Expenses | 30,000 |
Solution
Working Capital = Current Assets - Current Liabilities
60,000 = 90,000 - Current liabilities
Current liabilities = 90,000 - 60,000
Current liabilities = ₹ 30,000
Quick Ratio = `"Quick assets"/"Current liabilities"`
Quick Assets = Total Current Assets - Prepaid expenses
= 90,000 - 30,000
= ₹ 60,000
Quick Ratio = `(60,000)/(30,000)`
Quick Ratio = 2 : 1
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