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Question
On the basis of following data, the liquid ratio of a company will be:
Current Ratio 5 : 3; Current Liabilities ₹ 75,000 and Inventory ₹ 25,000
Options
1 : 1
2 : 1.8
3 : 2
4 : 3
MCQ
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Solution
4 : 3
Explanation:
Current Ratio = `"Current Assets"/"Current Liabilities"`
`5/3` = `"Current Assets"/(75,000)`
Current Assets = `5/3 xx 75,000`
= ₹ 1,25,000
Liquid Assets = Current Assets − Inventory
= 1,25,000 − 25,000
= ₹ 1,00,000
Liquid Ratio = `"Liquid Assets"/"Current Liabilities"`
= `(1,00,000)/(75,000)`
= 4 : 3
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