Respuesta :
Quick ratios would increases when inventory is sold on account for a price equal to itsoriginal cost.
About quick ratio
Quick ratio is one of the financial ratios used to measure the liquidity position of a company, project, investment center or profit center.
The special feature of this ratio from other Liquidity Ratios is that the Quick Ratio only takes into account cash and cash equivalent items for calculation and interpretation.
It ignores other items that may not be quickly converted to easy cash from the calculations.
For example, inventory is not included in the calculation because it takes so long to convert into cash. This ratio is sometimes called the Acid Test Ratio or the acid-test ratio but the meaning is still the same.
If the ratio is higher than one, it means that the current assets of the entity after deduction of inventories are higher than the current liabilities. This further means the entity can use current assets to pay off current liabilities.
Or we can say that the entity is financially sound on the basis of what this ratio tells us.
Likewise, if the ratio is lower than one, the entity may not be able to pay off its current liabilities using current assets. It can be said that the entity is not financially sound.
Learn more about quick ratio at https://brainly.com/question/28624468.
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