@bless27 saysMarch 8, 2024 at 12:40 pmThank you the after chapter tests, they help to rewire how i think. I’m gratefulLog in to Reply
anyapiri saysJuly 27, 2023 at 11:27 pmi understand the quick ratio increasing, but why would current ratio increase? since both receivable and inventory make up calculations for current ratio and the credit sales is merely a movement from inventory to receivablesLog in to Reply
John Moffat saysJuly 28, 2023 at 7:24 amRecievables will be at the selling price, but inventory is recorded at cost (which is lower than the selling price).Log in to Reply
charles95 saysMay 19, 2023 at 12:41 pmThe level of inventory does not affect the Quick ratio. So how is it then that a sale of inventory on credit changed both ratios upwards??Log in to Reply
John Moffat saysMay 19, 2023 at 4:10 pmIf it is sold on credit then receivables will increase (and so the quick ratio will increase).Log in to Reply
zunaibkhan saysDecember 21, 2023 at 6:22 amit will increase quick ratios as inventories have decreased but the amount of liabilities remained the same.Log in to Reply
@bless27 says
Thank you the after chapter tests, they help to rewire how i think. I’m grateful
Martha says
Good
anyapiri says
i understand the quick ratio increasing, but why would current ratio increase? since both receivable and inventory make up calculations for current ratio and the credit sales is merely a movement from inventory to receivables
John Moffat says
Recievables will be at the selling price, but inventory is recorded at cost (which is lower than the selling price).
Noah@Mwale says
Very Helpful Thank you
charles95 says
The level of inventory does not affect the Quick ratio. So how is it then that a sale of inventory on credit changed both ratios upwards??
John Moffat says
If it is sold on credit then receivables will increase (and so the quick ratio will increase).
zunaibkhan says
it will increase quick ratios as inventories have decreased but the amount of liabilities remained the same.
John Moffat says
That is not correct. See my previous reply.