Calculate opening and closing trade receivables from the following information current ratio 5:3 quick ratio 3:5 working capital 100000 inventory turover ratio 2 times
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Difference in Current ratio and Quick ratio is of stocks or inventory. Because in Current assets Stock is counted, but in Quick assets Stock is not counted.
Quick assets = Current assets - Stock
Working capital = Current assets - Current liabilities = 1,00,000
Current assets / Current liabilities = 5 / 3 or Current liabilities = Current assets x 3 / 5
(CL + 1,00,000) / CL = 5 / 3
Solving, you get CL = 1,50,000 and CA = CL + 1,00,000 = 2,50,000
Quick assets / Current liabilities = 3 / 5
Solving, you get = QA = 90,000
Stock = CA - QA = 2,50,000 - 90,000 = 1,60,000.
From the given information, trade receivables cannot be determined.
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