Why we deduct liquid aset from current aseet to calculate inventory
Since.
Liquid assets means all current assets excluding inventory and prepaid expenses.
Or
Liquid assets = Current assets - inventory - prepaid expenses.
Therefore
Inventory = Current Assets - Liquid assets
Assuming prepaid expenses are Zero.
Liquid assets means all current assets excluding inventory and prepaid expenses.
Or
Liquid assets = Current assets - inventory - prepaid expenses.
Therefore
Inventory = Current Assets - Liquid assets
Assuming prepaid expenses are Zero.