HKSI Paper 8 Securities analysis question: current assets of HK$480 million

HKSI Paper 8Securities analysis

A company has current assets of HK$480 million, including inventories of HK$180 million, and current liabilities of HK$240 million. What is its quick ratio?

A 1.25
B 0.63
C 2.00
D 0.75

Show the answer and explanation

Answer: A. 1.25

The quick (acid-test) ratio excludes inventories, the least liquid current asset: (current assets − inventories) ÷ current liabilities. Working: (HK$480m − HK$180m) ÷ HK$240m = HK$300m ÷ HK$240m = 1.25. A result of 2.00 is the current ratio (HK$480m ÷ HK$240m), which keeps inventories in. A result of 0.75 divides inventories by current liabilities. A result of 0.63 divides the quick assets by current assets (HK$300m ÷ HK$480m) instead of by current liabilities. Source: Standard ratio analysis (quick ratio = (current assets − inventories) ÷ current liabilities) (as at October 2026).

Common mistake

Forgetting to strip out inventories, which gives the current ratio instead of the quick ratio.

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Original study material mapped to the public HKSI Paper 8 syllabus. Unofficial, not endorsed by HKSI Institute or the SFC. Verify figures and rules against current guidance before relying on them.