Question

A firm has current ratio 3:2, Quick ratio 3:4 & Current liabilities 40,000. They sold stock of
20,000 on credit which resulted in current ratio 5:4. What will be new quick ratio?​

Answer 1

Explanation:

Current Assets = 2.5x = 2.5 × 40,000 = 1,00,000 ... The company is interested in maintaining the Current Ratio of 2:1 by paying off the ... on credit will result increase in Current Liabilities and no change in Quick Assets.