Business Ratios Question: Download Questions PDF
Can you please explain the difference between current ratio and the quick ratio?
![Business Ratios Interview Answer Business Ratios Interview Question](https://globalguideline.com/public/images/interview/26.png)
Answer:
To illustrate the difference between the current ratio and the quick ratio, let's assume that a company's balance sheet reports current assets of $60,000 and current liabilities of $40,000. Its current assets include $35,000 of inventory and $1,000 of supplies and prepaid expenses. The company's current ratio is 1.5 to 1 [$60,000 divided by $40,000]. Its quick ratio is 0.6 to 1 [($60,000 minus $36,000) divided by $40,000].
Download Business Ratios Interview Questions And Answers
PDF
Previous Question | Next Question |
Define gross margin? | Can you please explain the difference between current ratio and working capital? |