At 31 October 2019, Tasha Limited has inventory of £60,000, trade payables of £80,000, cash at the bank of £24,500, trade receivables of £88,000, cash in hand of £2,500 and current tax payable of £20,000. Tasha Limited also has a loan of £125,000 which is due for repayment by 5 equal annual instalments commencing on 30 September 2020. What is Tasha Limited's quick ratio?

Question

Quizplus · Accepted Answer

The quick ratio is calculated as (Current Assets - Inventory) / Current Liabilities. Current Assets excluding inventory are £24,500 (cash at bank) + £2,500 (cash in hand) + £88,000 (trade receivables) = £115,000. Current Liabilities are £80,000 (trade payables) + £20,000 (current tax payable) = £100,000. Quick ratio = £115,000 / £100,000 = 1.15:1. However, the correct answer choice provided is closest to 0.92:1, indicating a possible error in the options or calculation.

At 31 October 2019, Tasha Limited Has Inventory of £60,000