Current Ratio and Quick Ratio BPP Kit

Dear John

Hope you are well.

Please could you help me understand where i am doing wrong with the BPP exam kit question below.

Question:

A firm with current assets of $40 million and current liabilities of $20 million buys $5 million of inventory on credit which increases its inventory level to $10 million. What will the effect be on its current ratio and quick ratio?

Answer:
Current ratio reduce by 10%
Quick ration reduce by 20%

I have no problem with the current ratio. It reduces by 10%
Before the new inventory is bought, the current ratio is $40 / $20 = 2. And after the new inventory, it is (40 + 5) / (20 + 5) = 1.8 and this is due to the increase in current assets and the current liabilities (as it’s been purchased on credit)

However, I am confused re quick ratio (after the purchase).

This is what answer reads:

Before the new inventory purchase 40 – 5 / 20 = 1.75 (which I am ok with)

After the purchase 40 – 5 / 25 = 1.4 (this is where i get confused. don’t we already have $5m inventory (question stem reads $5 m inventory purchase increases the inventory to $10m). So, don’t we need to do 40 – 10 / 25 instead of 40 – 5 / 25 to calculate the quick ratio after the purchase of $5 m inventory?

Hope I made myself clear.
Your help is appreciated as always sir.

Thanks
Mia