Question

A company's Current Ratio is
2.5:1 and Liquid Ratio is 1.6:1. If
its Current Assets are
7,50,000, what will be the value
of inventory?​

Answer 1

Answer:

the amount of inventory would be 2,70,000

Answer 2

Answer:

The value of Inventory is 2,70,000

Explanation:

Current Ratio = $\sf{\dfrac{Current \: Assets}{Current \: Liabilities}}$

Let,

Current Liabilities be as x

$\sf{\implies{\dfrac{2.5}{1} = \dfrac{7,50,000}{x}}}$

$\implies$ 2.5x = 7,50,000x

$\implies$ 7,50,000/2.5x

$\implies$ 3,00,000

Current Liabilities = 3,00,000

Liquid Ratio = $\sf{\dfrac{Liquid \: Assets}{Current \: Liabilities}}$

$\sf{\implies{\dfrac{1.6}{1} = \dfrac{Liquid \: Assets}{ 3,00,000}}}$

Liquid Assets =

$\implies$ 1.6 × 3,00,000

$\implies$ 4,80,000

Liquid Assets = 4,80,000

Inventory :

Inventory = Current Assets - Liquid Assets

$\implies$ 7,50,000 - 4,80,000

$\implies$ 2,70,000

Inventory = 2,70,000

Therefore, the value of Inventory = 2,70,000