Question

A Company’s Current Ratio is 2.8 : 1; Current Liabilities are ₹ 2,00,000; Inventory is ₹ 1,50,000 and Prepaid Expenses are ₹ 10,000. Its Liquid Ratio will be ______.

पर्याय

• 3.6 : 1

• 2.1 : 1

• 2 : 1

• 2.05 : 1

Answer 1

A Company’s Current Ratio is 2.8 : 1; Current Liabilities are ₹ 2,00,000; Inventory is ₹ 1,50,000 and Prepaid Expenses are ₹ 10,000. Its Liquid Ratio will be 2 : 1.

Explanation:

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

2.8 = `("Current Assets")/(2,00,000)`

Current Assets = 2,00,000 × 2.8

= ₹ 5,60,000

Liquid Assets = Current Assets − Inventory − Prepaid Expenses

= 5,60,000 − 1,50,000 − 10,000

= ₹ 4,00,000

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

= `(4,00,000)/(2,00,000)`

= 2 : 1