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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › current ratio n quick ratio
What happen on current ratio and quick ratio if increasing inventory in later date?
Tell me what you think and then I will tell you whether you are correct or not 🙂
Currently: *assume that current asset including inventory*
current ratio – current asset / current liability
quick ratio – (current asset – inventory) / current liability
If increasing inventory:
current ratio – (current asset + new inventory) / (current liability + new inventory)
quick ratio – (current asset – inventory) / (current liability + new inventory)
*conclusion – It will be decrease in both current and quick ratio ?
*can I get an example from sir?
Your conclusion is correct for both 🙂
Deeply appreciated.?
Thanks alot..
You are welcome 🙂