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Question
Current Liabilities ₹ 80,000; Working Capital ₹ 1,70,000; Inventory ₹ 85,000; Prepaid Expenses ₹ 5,000. Calculate Quick Ratio.
Numerical
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Solution
Working Capital = Current Assets − Current Liabilities
₹ 1,70,000 = Current Assets − ₹ 80,000
Current Assets = ₹ 1,70,000 + ₹ 80,000
= ₹ 2,50,000
Liquid Assets = Current Assets − Inventories − Prepaid Expenses
= ₹ 2,50,000 − ₹ 85,000 − ₹ 5,000
= ₹ 1,60,000
Quick Ratio = `"Liquid Assets"/"Current Liabilities"`
= `(₹ 1,60,000)/(₹ 80,000)`
= 2 : 1
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