Q. Calculate DR's quick ratio?
DR has the following balances under current assets and current liabilities:
Current assets
$
Current liabilities
Inventory
50,000
Trade payables
88,000
Trade receivables
70,000
Interest payable
7,000
Bank
10,000
Calculate DR's quick ratio.
Solution:
Quick ratio = (current assets -inventory) / current liabilities
= (70,000 + 10,000) / (88,000 + 7,000)
= 0.84