Question

Current Assets of a company is are  ₹ 5,00,000. Its Current Ratio is 2.5 : 1 and Quick Ratio is 1 : 1. Calculate value of Current Liabilities, Liquid Assets and Inventory.

Answer 1

`"Current Ratio" = "Current Assets"/ "Current liability" = 2.5/1`

`"Quick Ratio" = "Liquid Assets"/"Current Liabilities" = 1/1`

Current Assets = 5,00,000

`"Current Liabilities" = "Current Assets"/2.5 = 500000/2.5 = 200000`

Liquid Assets = Current Liabilities × 1 = 2,00,000

Inventory = Current Assets − Quick Assets

= 5,00,000 − 2,00,000 = 3,00,000