June 2014 Question # 2(B)

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February 27, 2017 at 12:06 am #374426
Ema
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Sir,

when finding Quick ratio or Acid test Ratio the formula used is C.A-Inventory/ C.L, but when finding out target Quick ratio in this Question why aren’t we subtracting inventory?

Thanks
February 27, 2017 at 7:48 am #374476
John Moffat
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But the answer does subtract inventory!!!!!

The total current assets are 12,164,384 (8,219,178 (receivables) + 3,945,206 (inventory))

The current assets without the inventory are simply the receivables of 8,219,178
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