Calculate dr''s quick ratio, Financial Econometrics

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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

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