Quick Ratio Formula:
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| Formula for Quick Ratio |
Meaning:
Quick Ratio is the second important
liquidity ratio that measures the organisation’s ability to meet immediate
obligations on a much stringent method. Here inventories which are slower to realise or convert into cash are eliminated from the current assets.
Example:
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| Example-Calculation of Quick Ratio of NMDC Ltd. |
Desired Number:
The minimum required number for safety is 1. Below one means inadequate safety and any number more than one indicates increased margin of safety.
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