Cash at bank 100000 debtors 1850000 stock 2375000 B/R 150000 unexpired insuramce premium 25000 creditors 2500000 B/P 200000 bank overdraft 300000 credit sales 5840000 find out quick ratio or debt collection period? can u give me the answer quickly.?

Question

Answer

Quick Ratio and Debt Collection Period

Quick Ratio:

The quick ratio, also known as the acid-test ratio, is a measure of a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by dividing the sum of cash, cash equivalents, and accounts receivable by the total current liabilities.

Given the information provided, we can calculate the quick ratio as follows:

Quick assets = Cash at bank + Debtors
= 100,000 + 1,850,000
= 1,950,000

Current liabilities = Bank overdraft + Creditors
= 300,000 + 2,500,000
= 2,800,000

Quick ratio = Quick assets / Current liabilities
= 1,950,000 / 2,800,000
= 0.6964

Therefore, the quick ratio is 0.6964 or approximately 0.70.

Debt Collection Period:

The debt collection period, also known as the average collection period, measures the average number of days it takes for a company to collect payment from its debtors. It is calculated by dividing the accounts receivable by the average daily credit sales.

Given the information provided, we need to calculate the average daily credit sales first:

Average daily credit sales = Credit sales / Number of days in the period

Assuming a standard 365-day period, the average daily credit sales would be:

Average daily credit sales = 5,840,000 / 365
= 16,000

Next, we can calculate the debt collection period as follows:

Debt collection period = Accounts receivable / Average daily credit sales
= 1,850,000 / 16,000
= 115.625

Therefore, the debt collection period is approximately 115.625 days.

In summary:

- Quick Ratio: 0.70
- Debt Collection Period: 115.625 days

Answer

(cash at bank+debtors+B/R)100000+1850000+150000=2100000/(current liabilities)2500000+200000+300000= 3000000so ,  2100000/3000000=0.7:1correct anser

Answer

0.7:1

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