Quick ratio
This query is : Resolved
01 August 2014
sir, why do we deduct stock from current asset? wt about debtors & creditors? can u pls explain me. thanku..
02 August 2014
it is because the assumption is that the stock cannot be converted into cash quickly whereas debtors can be. in real world this assumption may not hold good
02 August 2014
Its because of stage of operating cycle stage. Raw materials will be converted into finished good. Then it will be sold and then comes the question of realization from debtors. Stock is at a very early stage of operating cycle whereas debtors is at a final stage of operating cycle. For this reason stock is excluded from current assets for calculation of Quick Ratio.
02 August 2014
thanks to both expert NKA and Sanjay ji. i was bit confused abt this concept.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- REGARDING GST ON COMMERICIAL PROPERTY
- Is this income indian or foreign income?
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- TDS U/S. 194NF
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- Applicable TDS rate for sale of property in Nov 2024
- Donation Receipt u/s 80G
- TDS deduction (debit notes)
- Can a partnership firm become partner in a LLP ?
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- TDS on purchase of value vouchers for employees ?
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
Trending Online Classes
CAclubindia
