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Q. Show the Quick ratio or acid test?
Quick ratio or acid test
Quick ratio = Current assets less inventories / Current liabilities (times)
This ratio measures the immediate solvency of a business as it removes the inventories out of the equation, which is the item least representing cash, as it needs to be sold. Normal is around 1: 1 however this varies within different industries.
Ray's Satellite Emporium wishes to verify the best order size of their best selling satellite dish (model TS111). Ray has estimated the yearly demand for this model at 1,000 units
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