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Question
Current Ratio 2.5 : 1; Quick Ratio 1 : 1; Current Assets ₹ 5,00,000. Calculate Current Liabilities; Liquid Assets and Inventory.
Numerical
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Solution
Current Ratio = `"Current Assets"/"Current Liabilities"`
2.5 = `(₹ 5,00,000)/"Current Liabilities"`
Current Liabilities = `(₹ 5,00,000)/2.5`
= ₹ 2,00,000
Quick Ratio = `"Liquid Assets"/"Current Liabilities"`
1 = `"Liquid Assets"/(₹ 2,00,000)`
Liquid Assets = ₹ 2,00,000 × 1
= ₹ 2,00,000
Inventories = Current Assets − Liquid Assets
= ₹ 5,00,000 − ₹ 2,00,000
= ₹ 3,00,000
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