- This topic has 3 replies, 2 voices, and was last updated 4 years ago by
.
-
Posts
-
It says to find quick acid ratio
Current asset 528855
Inventory 109400
Current liabilities 430680
Taxation liability 55000It is simply dividing, (CA-Inventory/CL) which give 0.97.
Why it is not subtracting Taxation from current liability as it clearly says in book that quick liabilities does not include taxation as it is paid in period more than 6 weeks (1.5 months).
I have no idea why your book has said that – you need to ask Kaplan.
What I state in my lectures is correct and is that all current liabilities are included in the calculation. There are no such things as ‘quick liabilities’ – liabilities are either current or non-current, and if the tax is payable within 6 weeks it is a current liability (and tax would almost certainly always be a current liability!
- You must be logged in to reply to this topic.