Question

from the following compute the current ratio and quick ratio
trade receivable 200000
prepaid expenses 20000
cash 60000
marketable securities 40000
machinery 10000
expenses payable 80000 trade payable 120000 debentures 400000
inventory 80000​

Answer 1

Answer:

The current ratio will be 10000

and the quick ratio will be 20000

Answer 2

Answer:

Current assets=trade receivable+prepaid expenses+cash+marketable securities+machinery+inventory

=200000+20000+60000+40000+80000

=400000

Current lib=Expenses payable+Trade payable

=80000+120000

=200000

Current ratio=Current asset/Current liability

=400000/200000

2/1

2:1

Liquid assets=Current assets-inventory-prepaid expenses

=400000-80000-20000

300000

Liquid ratio=Liquid asset/current lib

=300000/200000

1.5/1

1.5:1