Question

Current liabilities of a company are Rs 75,000. If current ratio is 4:1 and liquid ratio is 1:1, calculate value of current assets, liquid assets and inventory.

Answer 1

`"Current Ratio" = "Current Assets"/"Current Liablities"`

`or,4 = "Current Assets"/"75,000"`

or, 4 × 75,000 = Current Assets

or, Current Assets = 3,00,000

`"Liquid Ratio" = "Liquid Aseets"/"Current Liablities"`

or, `1 = "Liquid Assets"/"75,000"`

Liquid Assets = 75,000

Inventory = Current Assets − Liquid Assets
                = 3,00,000 − 75,000
                = 2,25,000