Question 37 of 38
Q.What is quick ratio ?
Puducherry TnboardTamil Nadu HSC (DGE) Commerce Board 2026Subjective· 2mImportance★★★★★
97% · 37/38 Questions
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Start your 14-day free trial to unlock the full solution →Quick ratio = Quick (liquid) assets ÷ Current liabilities; ideal is 1 : 1. It tests immediate short-term solvency.
Meaning (TN HSC Class-12 Accountancy — Ratio Analysis): The quick ratio, also known as the liquid ratio or acid-test ratio, shows the relationship between quick assets and current liabilities. It measures whether a firm can pay off its current liabilities immediately without having to sell its inventory.
Formula:
Quick ratio = Quick assets ÷ Current liabilities
where Quick assets = Current assets − Inventory (closing stock) − Prepaid expenses.
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