Question
The Quick Ratio (or Acid-Test Ratio) is a more stringent
measure of liquidity than the Current Ratio because it:Solution
The Quick Ratio is calculated as (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities. It excludes inventory because it is typically the least liquid current asset and may not be easily convertible to cash in the short term to meet immediate obligations. This makes it a more conservative test of short-term liquidity.
- An item is listed for Rs. 20,000. It is sold after giving three consecutive discounts of 25%, 5% and 10%. What is the final selling price of the item?
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Vendor ‘P’ sold goods for Rs. 1500 at a profit of 25%. Another vendor ‘Q’ earned 40% more profit than ‘P’. Find Q’s profit percentage if c...
A discount of Rs. 900 is given on a chair, and it is Rs. 300 less than the profit made from selling it. If the cost price of the chair is Rs. 800, calcu...
