Question

Current Liabilities of a company are  ₹ 6,00,000. Its Current Ratio is 3 : 1 and Liquid Ratio is 1 : 1. Calculate value of Inventory.

Answer 1

`"Current Ratio" = "Current Assets"/ "Current liability" = 3/1`

`"Acid Test Ratio" = "Liquid Assets"/"Current Liabilities" = 1/1`

Current Liabilities = 6,00,000

Current Assets = 3 × Current Liabilities

= 3 × 6,00,000 = 18,00,000

Liquid Assets = 1 × 6,00,000 = 6,00,000

Inventory = Current Assets − Liquid Assets

= 18,00,000 − 6,00,000 = 12,00,000