Financial ratios
This query is : Resolved
Akhil Jain
(Querist)
26 September 2015
Can quick ratio exceed current Ratio?
Amol S Joglekar
(Expert)
26 September 2015
It is a very rare instance.
Just to stretch the imagination to NEGATIVE extreme : current asset consists of CASH and -ve DEBTORS balance.
Just to stretch the imagination to NEGATIVE extreme : current asset consists of CASH and -ve DEBTORS balance.
Akhil Jain
(Querist)
27 September 2015
how can debtor balance be negative?
Amol S Joglekar
(Expert)
27 September 2015
That is a rare situation. In seller's market, the sales are effected with 100% advance. In such a case, the balance can be negative.
Akhil Jain
(Querist)
27 September 2015
But debtors are included both in quick and current ratio, so how can quick ratio be greater than current ratio?
Amol S Joglekar
(Expert)
28 September 2015
All debtors are NOT included in both?
There is a convention of including debtors only upto 90 days of age
There is a convention of including debtors only upto 90 days of age
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