Question

Current Assets ₹ 4,00,000; Current Liabilities ₹ 2,00,000 and Inventory is ₹ 50,000. Liquid Ratio will be ______.

Options

• 2 : 1

• 2.25 : 1

• 4 : 7

• 1.75 : 1

Answer 1

Current Assets ₹ 4,00,000; Current Liabilities ₹ 2,00,000 and Inventory is ₹ 50,000. Liquid Ratio will be 1.75 : 1.

Explanation:

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

Liquid Assets = Current Assets − Inventory

= 4,00,000 − 50,000

= ₹ 3,50,000

Liquid Ratio = `(3,50,000)/(2,00,000)`

= 1.75 : 1