Question

Calculate the Liquid Ratio (up to two decimal places) from the following information:

Particulars
Current Assets	₹ 1,26,000
Inventories	₹ 2,000
Current Ratio	1.5 : 1

Answer 1

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

`1.5/1 = (₹ 1,26,000)/("Current Liabilities")`

Current Liabilities = `(₹ 1,26,000)/1.5`

= ₹ 84,000

Liquid Assets = Current Assets − Inventories

= ₹ 1,26,000 − ₹ 2,000

= ₹ 1,24,000

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

= `(₹ 1,24,000)/(₹ 84,000)`

= `1.476/1` or 1.48 : 1