The quick ratio, or acid-test, measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. . He soon learned all that his teacher could teach;. payroll taxes.
The previous year Quick Ratio was 1. Web. Current assets = Cash + Accounts receivables + Prepaid expense + Inventory = 20000 + 15000 + 2000 + 48000 = 85000 Current liabilities = Creditors + Bank overdraft = 5000 + 40000 = 45000 Quick assets = Current assets - prepaid expenses - inventory = 85000 - 2000 - 48000 = 35000 Current Ratio = = = 17:9 Quick ratio = = = 7:9 Q. Therefore, inventory is not considered to be a quick asset.