Question

Calculation of Current Assets, Liquid Assets and Current Liabilities
8. A Ltd. has a current ratio of 3.5:1 and acid-test ratio of 2:1. If the inventory is 30,000, find ou
its current assets and total current liabilities.
Ans CL 20.000; C.A. 70,0001​

Answer 1

Answer:

Explanation:

current ratio = current assets / current liabilities  (without inventory)

liquid ratio = current assets / current liabilities ( with inventory )

(30000 + X)/Y = 2

therefore 30000+ X = 2Y

also make use of

X/Y = 3.5

therefore X = 3.5Y

replace x in the first formula with the 3.5Y

30000 + 3.5Y = 2Y

hence Y is 20000 this is the current liabilities

use formula X/Y = 3.5

hence 3.5 * 20000 = 70000 which is the current assets