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Question
Venus Ltd’s Inventory is ₹3,00,000. Total Liquid Assts are ₹12,00,000 and Quick Ratio is 2:1. Work out Current Ratio.
Hints:
1. `2/1 ("Quick Ratio") = ("Liquid Assets" (₹ 12,00,000))/"Current Liabilities"`
Current Liabilities =`(12,00,000)/2`= 6,00,000.
2. Current Assets = Liquid Assets + Inventory = ₹ 15,00,000.
Sum
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Solution
`"Quick Ratio" = "Quick Assets"/"Current Liabilities" = 2/1`
Quick Assets = 12,00,000
`"Current Liabilities" = "Quick Assets"/2 = 1200000/2 = 600000`
Current Assets = Quick Assets + Stock
= 12,00,000 + 3,00,000 = 15,00,000
`"Current Ratio" = "Current Assets"/ "Current liability" = 1500000/600000 = 2.5 : 1`
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