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Current ratio

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

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May 26, 2018 at 5:12 am #453997
alikhakar
Participant
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It is written in the book that while calculating current ratio, fixed deposits with bank with a period of 6 months are also included in current asset. Why ? because the short term investment that can be included in current asset must be convertible into cash in 3 months. Then why fixed deposits with 6 months time are also included
May 26, 2018 at 9:50 am #454063
John Moffat
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- Topics: 57
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Current assets are assets that can reasonably be expected to be converted into cash within one year!
What you are referring to are short-term investments in marketable securities – bank deposits are not marketable securities.
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