NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Financial Analysis
A company has current assets of Rs 600 crore, of which inventory is Rs 200 crore, and current liabilities of Rs 250 crore. What is its quick ratio?
The quick ratio is 1.60. Excluding inventory of Rs 200 crore from current assets of Rs 600 crore leaves Rs 400 crore of quick assets, which divided by current liabilities of Rs 250 crore gives 1.60.
- A2.40
- B1.60Correct
- C0.80
- D1.20
Explanation
Quick assets = 600 - 200 = 400 crore. Quick ratio = 400/250 = 1.60. The 2.40 option is the current ratio (600/250), which fails to exclude inventory. The 0.80 option uses inventory 200/250, which is not the quick ratio.
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