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