Question

[Ans : Current Asset Rs. 45,000; Current Liabiles . 10000)
Prob.
22
Calculate the Current Ratio from :
Stock Rs. 20,000; Prepaid Expenses Rs. 5,000; Working Capital Rs. 60,000;
Liquid Assets Rs. 75,000.
[Ans: Current Assets Rs. 1,00,000; Current Liabilities Rs. 40,000; Current Ratio​

Answer 1

Answer:

Current Ratio = 2.5 : 1

Explanation:

Given :

• Stock = Rs. 20,000

• Prepaid Expenses = Rs. 5,000

• Working Capital = Rs. 60,000

• Liquid Assets = Rs. 75,000

To find :

• Calculate the Current Ratio

Solution:

Current Ratio = Current Assets / Current Liabilities

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

★ Calculate Current Assets :

Current Assets = Stock + Prepaid Expenses + Liquid Assets

⇒ Current Assets = 20,000 + 5,000 + 75,000

⇒ Current Assets = Rs. 1,00,000

____________________________

Working Capital = Current Assets - Current Liabilities

⇒ 60,000 = Current Assets - Current Liabilities

⇒ 60,000 = 1,00,000 - Current Liabilities

⇒ Current Liabilities = 1,00,000 - 60,000

Current Liabilities = Rs. 40,000

____________________________

⇒ $\sf{Current \: Ratio \: = \: \frac{Current \: Assets}{Current \: Liabilities}}$

⇒ $\sf{Current \: Ratio\: = \frac{100000}{40000}}$

Current Ratio = 2.5 : 1

The answer is,

Current Ratio = 2.5 : 1