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If current ratio for a company is equal to its acid test (that is, quick ratio), then:
A: The current ratio must be less than one.
B: Working capital is negative.
C: Trade payables and overdraft are greater than trade payables plus inventories.
D: The Company does not carry any inventories
Solution:
The answer is D.
Q. Describe the Working capital? Working capital is the capital available for conducting day-to-day operations of the business and includes current assets and current liabiliti
If current ratio for a company is equal to its acid test (that is, quick ratio), then: A: The current ratio must be less than one. B: Working capital is negative. C: Trade
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