Question

A firm's current ratio is 2.5:1. Its net working capital is
Rs. 3,75,000 and its stock is valued at Rs. 1,75,000. Calculate
Quick Ratio.​

Answer 1

Answer:

1.8:1

Explanation:

current assets= 2.5 current liabilities

working capital=current assets-current liabilities

375000=2.5 current liabilities- current liabilities

1.5 current liabilities=375000

current liabilities=250000

current asset =2.5×250000=625000

liquid assets =625000-175000=450000

quick ratio=450000÷250000=1.8

Answer 2

Answer:

Quick Ratio = 1.8 : 1

Explanation:

$\sf{Current\:Ratio = {\dfrac{Current \:Assets }{Current \: Liabilities} \: = \dfrac{2.5}{1}}}$

★ According to the Question :

Working Capital = Rs. 3,75,000

Let,

Current Liabilities = x

Current Assets = 2.5x

Working Capital = Current Assets - Current Liabilities

$\longrightarrow$ 3,75,000 = 2.5x - x

$\longrightarrow$ 3,75,000 = 1.5x

$\sf{\longrightarrow{x \: = \: \dfrac{375000}{1.5}}}$

$\longrightarrow$ x = 2,50,000

Current Liabilities = 2,50,000

Current Assets = 2.5x

$\longrightarrow$ 2.5 (2,50,000)

$\longrightarrow$ 6,25,000

Current Assets = 6,25,000

Quick Ratio :

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

Current Liabilities = 2,50,000

Quick Assests = Current Assets - Stock

$\longrightarrow$ 6,25,000 - 1,75,000

$\longrightarrow$ 4,50,000

Quick Assests = 4,50,000

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

$\sf{\longrightarrow{ \dfrac{450000}{250000} = \dfrac{1.8}{1}}}$

Quick Ratio = 1.8 : 1

Therefore,

Quick Ratio = 1.8 : 1