Question

Current ratio = 4.5 : 1, quick ratio = 3 : 1. Inventory is Rs. 36,000. Calculate the current assets and current liabilities.

Answer 1

Current Ratio = `"Current Assets"/"Current Liabilities" = 4.5`

⇒ Current Assets = 4.5 × Current Liabilities

Quick Ratio = `"Quick Assets"/" Current Liabilities" = 3`

⇒ Quick Assets = 3 × Current Liabilities

Inventory = CA − QA

Rs. 36,000 = 4.5 × Current Liabilities − 3 × Current Liabilities

Rs. 36,000 = 1.5 × Current Liabilities

Current Liabilities = `(36,000)/1.5`

= Rs. 24,000

Current Assets = 4.5 × Current Liabilities

Current Assets = 4.5 × 24,000

= 1,08,000