A company sells some inventory on credit at a profit.
What is the effect on the current ratio and on the quick ratio?
Answer: both ratio will increase
My question is why both ratio will increase since quick ratio is calculate which is exclude inventory?
Ask the Tutor ACCA FM
Current ratio and quick ratio
Quick ratio increases because there is an increase in trade receivables. While current ratio increases because the increase in trade receivable is more due to the profit element.
8y ago#2rishabbohra98: Please don't answer in this forum, because it is Ask the Tutor and you are not the tutor (but please do help people in the other FM forum :-) )
Amy: rishabbohra98's answer is correct :-)
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