Current ratio and quick ratio: Class 12 practice

Current ratio = current assets ÷ current liabilities. Read the method, follow the three worked examples, then try the six questions.

What you should know first

Balance sheet items

The idea behind current ratio and quick ratio

Current ratio = current assets ÷ current liabilities. Quick (liquid) ratio = (current assets − inventory − prepaid expenses) ÷ current liabilities. They measure short-term solvency.

Step-by-step method

Add current assets and current liabilities.
Current ratio = CA ÷ CL.
Quick assets = CA − inventory − prepaid; divide by CL.

Worked example 1 (Basic)

Inventory ₹90,000, debtors ₹90,000, cash ₹50,000, prepaid expenses ₹0, current liabilities ₹80,000. Find the current ratio.

CA = ₹2,30,000
Quick assets = ₹1,40,000
Current ratio = 2.88 : 1
Quick ratio = 1.75 : 1
Answer: 2.88 : 1

Worked example 2 (Standard)

Inventory ₹60,000, debtors ₹70,000, cash ₹20,000, prepaid expenses ₹0, current liabilities ₹50,000. Find the quick ratio.

CA = ₹1,50,000
Quick assets = ₹90,000
Current ratio = 3 : 1
Quick ratio = 1.8 : 1
Answer: 1.8 : 1

Worked example 3 (Challenge)

Inventory ₹1,00,000, debtors ₹60,000, cash ₹50,000, prepaid expenses ₹15,000, current liabilities ₹30,000. Find the current and quick ratios.

CA = ₹2,25,000
Quick assets = ₹1,10,000
Current ratio = 7.5 : 1
Quick ratio = 3.67 : 1
Answer: 7.5 : 1 and 3.67 : 1

Common mistakes and misconceptions

Including inventory in quick assets
Including long-term loans in current liabilities

Practice questions

(Basic) Inventory ₹90,000, debtors ₹40,000, cash ₹10,000, prepaid expenses ₹5,000, current liabilities ₹70,000. Find the current ratio.
(Basic) Inventory ₹60,000, debtors ₹10,000, cash ₹10,000, prepaid expenses ₹0, current liabilities ₹30,000. Find the current ratio.
(Standard) Inventory ₹10,000, debtors ₹30,000, cash ₹50,000, prepaid expenses ₹5,000, current liabilities ₹20,000. Find the quick ratio.
(Standard) Inventory ₹80,000, debtors ₹10,000, cash ₹30,000, prepaid expenses ₹0, current liabilities ₹1,00,000. Find the quick ratio.
(Challenge) Inventory ₹40,000, debtors ₹10,000, cash ₹20,000, prepaid expenses ₹10,000, current liabilities ₹40,000. Find the current and quick ratios.
(Challenge) Inventory ₹60,000, debtors ₹80,000, cash ₹40,000, prepaid expenses ₹0, current liabilities ₹60,000. Find the current and quick ratios.

Answer key with full working

Q1: CA = ₹1,45,000 → Quick assets = ₹50,000 → Current ratio = 2.07 : 1 → Quick ratio = 0.71 : 1 → Answer: 2.07 : 1
Q2: CA = ₹80,000 → Quick assets = ₹20,000 → Current ratio = 2.67 : 1 → Quick ratio = 0.67 : 1 → Answer: 2.67 : 1
Q3: CA = ₹95,000 → Quick assets = ₹80,000 → Current ratio = 4.75 : 1 → Quick ratio = 4 : 1 → Answer: 4 : 1
Q4: CA = ₹1,20,000 → Quick assets = ₹40,000 → Current ratio = 1.2 : 1 → Quick ratio = 0.4 : 1 → Answer: 0.4 : 1
Q5: CA = ₹80,000 → Quick assets = ₹30,000 → Current ratio = 2 : 1 → Quick ratio = 0.75 : 1 → Answer: 2 : 1 and 0.75 : 1
Q6: CA = ₹1,80,000 → Quick assets = ₹1,20,000 → Current ratio = 3 : 1 → Quick ratio = 2 : 1 → Answer: 3 : 1 and 2 : 1

Syllabus note

This skill is listed under "Accounting Ratios" for Class 12 in the NCERT/CBSE books. ICSE, IGCSE, IB and state boards may teach it in a different chapter or year.

Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.

Related practice and notes

Frequently asked questions

Which chapter is current ratio and quick ratio in?

"Accounting Ratios", Class 12 Accountancy (NCERT/CBSE). Other boards may place it differently.

How were the answers checked?

Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.

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