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Question
A Company’s inventory is ₹ 2,00,000. Total liquid assets are ₹ 8,00,000 and quick ratio is 2 : 1. Calculate the current ratio.
Numerical
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Solution
Quick Ratio = `"Liquid Assets"/"Current Liabilities"`
2 = `(₹ 8,00,000)/("Current Liabilities")`
Current Liabilities = `(₹ 8,00,000)/2`
= ₹ 4,00,000
Current Assets = Liquid Assets + Inventory
= ₹ 8,00,000 + ₹ 2,00,000
= ₹ 10,00,000
Current Ratio = `"Current Assets"/"Current Liabilities"`
= `(₹ 10,00,000)/(₹ 4,00,000)`
= 2.5 : 1
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