Question

Current ratio is 3:1 net working capital rs. 200000 inventory rs. 220000 calculate quick ration

Answer 1

Working Capital = Current Assets - Current Liabilities

Current Ratio = 3:1    Working Capital = 2

If working capital is 2 then current assets will be = 3

If working capital is 1 then current assets = 3/2

and if working capital is 2,00,000 then 3/2×200000 = 3,00,000

Current Liabilities = Current Assets - Working Capital

3,00,000-2,00,000 = 1,00,000

Quick ratio = Current Assets- Inventories/ Current liabilities

Thus = 3,00,000- 2,20,000/ 1,00,000

= 4:5

Answer 2

Current Ratio = Current Assets (C.A)/ Current Liabilities (C.L)  = 2/1

So, CA= 2 CL

Now, Working Capital = Current Assets(C.A) minus Current Liabilities (C.L) = Rs.60000

So, C.A - C.L = 60000

       2 C.L-CL = 60000

        C.L = Rs.60000

Now, C.A = 2 x 60000 = Rs.120000