Question

A business has current ratio 3:1 and quick ratio 1.2:1. If the working capital is 1.80,000.
calculate the current liabilities and stock..
(Ans. Current liabilities 90,000, Stock 7 1,62,000​

Answer 1

$\begin{gathered}\frak{Given} \begin{cases} \sf Current\:Ratio = \frak{3:1} & \\ \\\sf Quick\:Ratio = \frak{1.2:1}& \\ \\ \sf Working\:Capital = \frak{1,80,000}&\end{cases}\\\\\end{gathered}$

Need to find: Current liabilities and stock

$\underline{\bigstar\:\boldsymbol{According\;to\;the\; Question\; :}}$

$\begin{gathered}\implies\sf{Current\:Ratio = \dfrac{Current\:Asset}{Current\:Liabilities}}\\\\\\ :\implies\sf{\dfrac{3}{1} = \dfrac{Current\:Asset}{Current\:Liabilities}}\\\\\\ :\implies\sf{Current\:Assets = 3 {\times} Current\:Liabilities}\\\\\\ \sf{Working\:Capital = Current\:Assets- Current\:Liabilities}\\\\\\ :\implies\sf{Working\:Capital= 3Current\:Liabilities - Current\: liabilities = 2{\times}Current\:Liabilities}\\\\\\ :\implies\sf{1,80,000 = 2{\times}Current\:Liabilities}}\\\\\\ :\implies\sf{Current\:Liabilities = 90,000}\\\\\\ :\implies\sf{Current\:Assets = 3{\times}90,000}\\\\\\ :\implies\sf{Current\:Assets= 2,70,000}\\\\\\ \sf{Quick\:Ratio= \dfrac{Current\:Assets - Stock}{Current\:Liabilities}}\\\\\\ :\implies\sf{\dfrac{1.2}{1}= \dfrac{2,70,000 - Stock}{90,000}}\\\\ :\implies\sf{2,70,000 - Stock = 1,08,000} :\implies\bf{Stock = 1,62,000}\end{gathered}$

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Answer 2

$\huge\mathrm{CorrectQuestion}$

A business has current ratio 3:1 and quick ratio 1.2:1. If the working capital is 1,80,000. Calculate the current liabilities and stock.

$\huge\mathrm{Answer}$

Current ratio = 3 : 1

Quick ratio = 1.2 : 1

Working capital = 1,80,000

Current ratio = Current assets / Current liabilities

➡ 3 : 1 = Current assets / Current liabilities

➡ Current assets = 3 × Current liabilities

Working capital = Current assets - Current liabilities

➡ 1,80,000 = 3 Current liabilities - Current liabilities

➡ 1,80,000 = 2 Current liabilities

➡ 90,000 = Current liabilities

Therefore,

Current assets = 3 × Current liabilities

➡ Current assets = 3 × 90,000

➡ Current assets = 2,70,000

Now, we know that

Quick ratio = Quick assets / Current liabilities

➡ 1.2 : 1 = Quick assets / 90,000

➡ ( 1.2 × 90,000 ) / 1 = Quick assets

➡ Quick assets = 1,08,000

Quick assets = Current assets - Stock

➡ Stock = Current assets - Quick assets

➡ Stock = 2,70,000 - 1,08,000

➡ Stock = 1,62,000

$\huge\mathrm{Solution ⭐}$

★ Current liabilities is 90,000 and stock is 1,62,000