NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Financial Analysis
A company's current assets are Rs 600 crore, inventory is Rs 200 crore and current liabilities are Rs 400 crore. What is its quick ratio?
The quick ratio is 1.00. It is found by removing inventory of Rs 200 crore from current assets of Rs 600 crore, which leaves Rs 400 crore of liquid assets, and dividing by current liabilities of Rs 400 crore.
- A1.00Correct
- B1.50
- C0.50
- D2.00
Explanation
Quick ratio = (current assets - inventory) / current liabilities = (600 - 200)/400 = 1.00. The figure 1.50 is the current ratio, which wrongly keeps inventory in the numerator. The figure 0.50 divides inventory by current liabilities.
Did you get it right without looking?
One question tells you little. A timed set on Company Analysis - Financial Analysis shows your real accuracy, how long you take and where you lose marks.
More Company Analysis - Financial Analysis questions
- Which item is classified as a cash flow from financing activities under the indirect-method cash flow statement?
- A company's inventory turnover is 8 times based on cost of goods sold of Rs 480 crore. Assuming a 365-day year, its days of inventory on han…
- Under the indirect method of preparing a cash flow statement, which adjustment is made to net profit when calculating cash flow from operati…
- Vikram Auto has current assets of Rs 90 crore, of which inventory is Rs 30 crore and prepaid expenses are Rs 6 crore. Current liabilities ar…
- A company reports revenue of Rs 800 crore, average total assets of Rs 500 crore, net profit of Rs 40 crore and average shareholders' equity …
- Company A reports EBIT of Rs 120 crore, interest expense of Rs 30 crore and a tax rate of 25%. It also has preference dividend of Rs 13.5 cr…