Quick Ratio of the firm is:

Quick Ratio Formula:

Quick Ratio = $\frac{\text{Quick Assets}}{\text{Current Liabilities}}$

Quick Assets = Current Assets - Inventories - Prepaid Expenses (or items not readily convertible to cash)

Calculation of Quick Assets:

Quick Assets include only those current assets that can be quickly converted into cash:

• Trade Receivables = Rs. 50,000
• Cash and Cash Equivalents = Rs. 30,000

Items excluded from Quick Assets:

• Inventories (Rs. 50,000) - Not liquid
• Advance Tax (Rs. 4,000) - Cannot be converted to cash; it's an adjustment against tax liability

Total Quick Assets = Rs. 50,000 + Rs. 30,000 = Rs. 80,000

Calculation of Current Liabilities:

• Trade Payables = Rs. 1,00,000
• Bank Overdraft = Rs. 4,000

Total Current Liabilities = Rs. 1,00,000 + Rs. 4,000 = Rs. 1,04,000

Quick Ratio:

Quick Ratio = $\frac{80,000}{1,04,000}$ = $\frac{80}{104}$ = 0.77:1

The bank overdraft is treated as a current liability (not netted off from cash) and advance tax is excluded from quick assets as it represents a prepayment that cannot be converted to cash.

Answer: Option 3 (0.77:1)