Question

a business has a current ratio 2:1and quick ratio 1.2:1 if working capital is 150000 calculate total current assets and stock

Answer 1

Formula

Formula  

Current ratio = current asset  ÷ Current liabilities  

Quick ratio - (current asset - stock)  ÷ Current liabilities

Working capital = current asset - current liabilities  

Answer

Current asset = 300000

Current liabilities  150000

Stock  = 120000

Answer 2

Computation:

Explanation:

Given:

Current ratio = 2 : 1

Quick ratio =  1.2 : 1

Working capital = (Current assets - current liabilities) = 150,000

So, Current liabilities = Current assets - 150,000

Computation:

Current ratio = Current assets / current liabilities

2 = Current assets / (Current assets - 150,000)

2 Current assets - 300,000 = Current assets

Current assets = 300,000

Current liabilities = 150,000

Quick ratio = (Current assets - Stock) / current liabilities

1.2 = (300,000 - Stock) / 150,000

180,000 = 300,000 - Stock

Stock = 120,000

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