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State about the Quick ratio or acid test
Quick ratio = Current assets less inventories /Current liabilities(times)
This ratio measures immediate solvency of a business as it removes inventories out of the equation, which is item least representing cashitem, because it needs to be sold. Normal is around 1: 1 however this varies within different industries.
application of the operating cycle to a vegetable company
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The capability of an asset to be converted into cash as quickly as possible without any discount to its value.
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