Practice - Liquidity Ratios
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Practice Questions
Test your understanding with targeted questions
Define the Current Ratio.
💡 Hint: Think about what current assets and liabilities refer to.
What are quick assets?
💡 Hint: Recall which assets are excluded in the Quick Ratio.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What does the Current Ratio measure?
💡 Hint: Relate it back to liquidity.
True or False: A Quick Ratio of less than 1 indicates strong liquidity.
💡 Hint: Think about what a Quick Ratio entails.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A business has current assets of ₹500,000, current liabilities of ₹300,000, inventory of ₹150,000, and prepaid expenses of ₹25,000. Calculate the Current Ratio and Quick Ratio.
💡 Hint: Apply the relevant formulas for each ratio carefully.
Consider a scenario where a company has a High Current Ratio (4:1) but a Low Quick Ratio (0.5:1). Discuss what this could indicate about the company's financial health.
💡 Hint: Think about how inventory affects liquidity.
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