Question

Handa Ltd.has inventory of Rs 20,000. Total liquid assets are Rs 1,00,000 and quick ratio is 2:1. Calculate current ratio.

Answer 1

`"Quick Rtaio" = "Liquid Assets"/"Current Liablities"`

Or, `2 = "1,00,000"/"Current Liablities"`

`or, "Current Liablities" = "1,00,000"/2`

                                     = `50,000`

Current Assets = Liquid Assets + Inventory
                        = 1,00,000 + 20,000
                        = 1,20,000

`"Current Ratio" = "Current Assets"/"Current Liablities"`

                           = `"1,20,000"/"50,000"`

                           =`"2.4"/1"="2.4 : 1`