Dear Sir,
Why both ratios will icrease in the 4rth question of the practice questions of management of working capital (1)?
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PRACTISE QUESTION OF MANAGEMENT OF WORKING CAPITAL (1)
7y ago#1If inventory is sold on credit at a profit, then inventory will fall and receivables will increase.
Because it is sold at a profit, the increase in receivables will be higher than the fall in inventory.
So....current assets in total will be higher (so current ratio increases).
Also, current assets minus inventory will be higher (so quick ratio increases)
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