Question

A Company’s Current Ratio is 2.4 : 1 and Working Capital is ₹ 5,60,000. If its Liquid Ratio is 1.5, what will be the value of Inventory?

विकल्प

• ₹ 6,00,000

• ₹ 2,00,000

• ₹ 3,60,000

• ₹ 6,40,000

Answer 1

₹ 3,60,000

Explanation:

Current Ratio = `"Current Assets"/"Current Liabilities"`

2.4 = `"Current Assets"/"Current Liabilities"`

2.4 × Current Liabilities = Current Assets

Let the Current Liabilities be `x`

Current Assets = `2.4x`

Working Capital = Current Assets − Current Liabilities

5,60,000 = `2.4x - x`

5,60,000 = `1.4x`

`(5,60,000)/1.4` = `x`

Current Liabilities `(x)` = ₹ 4,00,000

Current Assets = `2.4x`

= 2.4 × 4,00,000

= ₹ 9,60,000

Liquid Ratio = `"Liquid Assets"/"Current Liabilities"`

1.5 = `("Liquid Assets")/(4,00,000)`

Liquid Assets = 4,00,000 × 1.5

= ₹ 6,00,000

Inventory = Current Assets − Liquid Assets

= 9,60,000 − 6,00,000

= ₹ 3,60,000