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Liquidity ratios

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Liquidity ratios

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by AvatarJohn Moffat.
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  • January 8, 2017 at 1:32 pm #365625
    Avatarjulietari
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    When a person sold an inventory on a credit basis are not recievable supposed to increase at the same amount of the inventory sold, what is the reason for increase in both current asset and quick ratios, is it not suppose not to change

    January 8, 2017 at 2:01 pm #365629
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54845
    • ☆☆☆☆☆

    Inventory is valued at cost not at the selling price (which will be higher).

    So receivables increase by more than the fall in inventory.

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