Quick ratio confusion - Financial perfomance

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topcat
topcat Registered Posts: 452
in AAT Level 4 (Level 8 in Scotland)
Hello :)

So quick ratio is

Current assets - inventories
current liabilities

Although in a question for BPP they have either forgotten to take it off or my understanding is a bit off?

Current Assets = £435
Inventories = £105
Liabilities = £140

My answer = 2.34

£435 - £105
£140

Although the book answer is : 3.1

£435
£140

do you take inventory off or just not add it on?

Cheers!

Comments

  • CeeJaySix
    CeeJaySix Registered Posts: 645
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    As long as you're reading the book right, their answer is wrong - they've used the current ratio rather than the quick (acid test) ratio (which you've written the right calculation for, but I get 2.36!).
  • topcat
    topcat Registered Posts: 452
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    just had another question on green light and on the quick ratio they don't include inventory , so you must not take if off? S

    so confusing

    thanks for you help by the way cee
  • Lucy_M
    Lucy_M Registered Posts: 136 Beyond epic contributor 🧙‍♂️
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    I don't like BPP questions, they word them oddly I think. Inventories would normally be included in the current assets total so then you would deduct it or just add the other liabilities together without it and use that total. Took Financial statements today... fingers crossed! And good luck xx

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