Should the Acid Test Ratio exclude WIP?

Should the Acid Test Ratio exclude WIP?

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I'm have an argument with a colleague that need's settling. When analysing a set of accounts for a professional services firm with no stock but bags of WIP, would it be to correct to exclude this WIP, as you would stock, when calculating the Acid test ratio.

Just need to kow 'cos there's a pint in it for me!

Mark Smith

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By stephenkendrew
20th Nov 2006 14:28

yes
Stock consists of raw materials, work in progress and finished goods. so yes it would be correct to exclude WIP since it is part of stock.

Mine's a pint of bitter!

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