Question : Which of the following statements is not true with respect to liquid ratio?
Option 1: liquid ratio is considered more dependable than current ratio
Option 2: liquid ratio less dependable than current ratio
Option 3: Inventory is included in liquid assets
Option 4: Ideal liquid ratio is 1: 1
Correct Answer: Inventory is included in liquid assets
Solution : Answer = Inventory is included in liquid assets.
Liquid assets typically exclude inventory. The liquid ratio, although similar to the current ratio, focuses more on immediate liquidity by excluding inventory from current assets.
Liquid Assets = Current Assets - Stock - P.Paíd Expenses. Hence, the correct option is 3.
Question : Which of the following is the correct formula for "Current Ratio"?
Question : The Current Liabilities of a Company are Rs.7,00,000. Its current ratio is 3.5: 1 and its acid test ratio is 1.5: 1. The value of Current assets, Liquid assets and Inventories are
Question : Which of the following statements is not true?
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile