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

Question

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

Team Careers360 · Accepted Answer

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.

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Question : Which of the following statements is not true with respect to liquid ratio?Option 1: liquid ratio is considered more dependable than current ratioOption 2: liquid ratio less dependable than current ratioOption 3: Inventory is included in liquid assetsOption 4: Ideal liquid ratio is 1: 1

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