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Q. Show the Quick ratio or acid test?
Quick ratio or acid test
Quick ratio = Current assets less inventories / Current liabilities (times)
This ratio measures the immediate solvency of a business as it removes the inventories out of the equation, which is the item least representing cash, as it needs to be sold. Normal is around 1: 1 however this varies within different industries.
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You are considering shortly opening a copier serving center near a university. Your estimate of fixed cost is at $15,000 a year and the variable cost for every copy made is $0.01.
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