Question

Current ratio and liquid ratio

Answer 1

Current ratio means the ratio will flow like and liquid ratio means ratio will flow like liquid.

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Answer 2

Current ratio = Current assets / Current Liablities

Lquid ratio = Quick assets /  Current Liablities

Explanation:

Current assets =  cash +  cash equivalents + accounts receivable + stock + marketable securities + pre-paid liabilities

Quick assets = Current assets - Stock - Pre-paid liabilities

Current liabilities = accounts payable + short-term debt + dividends + notes payable

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