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Question
Read the following information and answer the given question:
| Year | 2020 | 2019 | 2018 |
| Amount | (in ₹) | (in ₹) | (in ₹) |
| Outstanding Expenses | 50,000 | 40,000 | 25,000 |
| Prepaid Expenses | 3,00,000 | 2,50,000 | 3,50,000 |
| Trade Payables | 18,00,000 | 16,00,000 | 14,00,000 |
| Inventory | 12,00,000 | 10,00,000 | 11,00,000 |
| Trade Receivables | 11,00,000 | 8,00,000 | 10,00,000 |
| Cash in hand | 17,00,000 | 12,00,000 | 15,00,000 |
| Revenue from operations | 24,00,000 | 18,00,000 | 20,00,000 |
| Gross Profit Ratio | 12% | 15% | 18% |
Quick Ratio for the year 2018 will be ______. (Choose the correct alternative)
Options
1.75 : 1
1.8 : 1
0.94 : 1
1.25 : 1
MCQ
Fill in the Blanks
Solution
1.75 : 1
Explanation:
Quick Assets = Trade receivables + Cash in hand
= ₹ 10,00,000 + ₹ 15,00,000
= ₹ 25,00,000
Current Liabilities = Outstanding Expenses + Trade Payables
= ₹ 25,000 + ₹ 14,00,000
= ₹ 14,25,000
Quick Ratio = `"Liquid Assets"/"Current liabilities"`
`= (₹ 10,00,000 + ₹ 15,00,000)/(₹ 14,25,000)`
`= (₹ 25,00,000)/(₹ 14,25,000)`
= 1.75 : 1
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Types of Ratios
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