Question

Calculate the Quick Ratio (up to two decimal places) of TXT Ltd. from the particulars given below:

Particulars	(₹)
Working Capital	80,000
Current Liabilities	50,000

Note: Current Assets include Inventory of ₹ 20,000.

Answer 1

1. Current Assets:

Working Capital = Current Assets − Current Liabilities

80,000 = Current Assets − 50,000

Current Assets = 80,000 + 50,000

= 1,30,000

2. Quick Assets (Liquid Assets):

Quick Assets = Current Assets − Inventory

Quick Assets = 1,30,000 − 20,000

= 1,10,000

3. Calculate Quick Ratio:

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

Quick Ratio = `(1,10,000)/(50,000)`

= 2.2 : 1