Question : Which measure of liquidity often excludes the asset with the lowest liquidity?
Option 1: Current ratio, Bills receivable
Option 2: Liquidity ratio, Bills receivables
Option 3: Current ratio.Stock
Option 4: Liquid ratio and stock
Correct Answer: Liquid ratio and stock
Solution : Liquidity ratios assess a company's ability to meet its short-term obligations. The liquidity ratios of a company determine how quickly it can convert its assets into cash and use it to pay its obligations. It does not include stock and prepaid expenses. Hence option 4 is the correct answer.
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
Option 1: Current assets 10,50,000. Liquid assets 6,12,500. Stock 4,37,500
Option 2: Current assets 10,50,000. Liquid assets 6,22,500, stock 4,27,500
Option 3: Current assets 6,22,500. Liquid assets Rs 10,50,000. Stock 4,27,500
Option 4: Current assets24,50,000, liquid assets 10,50,000. Stock 14,00,000
Question : ---------------------ratio explains the relationship between current assets and current liabilities of a business.
Option 1: Liquid ratio
Option 2: Current ratio
Option 3: Current assets ratio
Option 4: Current liabilities ratio
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
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