Question

Haritha Co. Ltd has inventory of Rs.40,000. Quick assets are Rs.80000 and quick ratio is 2:1. Calculate current ratio.

Answer 1

Record a cash withdrawal. Credit or decrease the cash account, and debit or increase the drawing account. The cash account is listed in the assets section of the balance sheet. For example, if you withdraw $5,000 from your sole proprietorship, credit cash and debit the drawing account by $5,000.

Answer 2

0.75 : 1

Explanation:

Given:

Inventory = 40,000

Quick assets = 80,000

Quick ratio = 2:1

Current ratio = ?

Computation :

Quick ratio = Quick assets / Current Liabilities

2 = 80,000 / Current liabilities

Current liabilities = 80,000 x 2

= 1,60,000

Current Assets = Quick assets + Inventory

                          = 80,000 + 40,000

                          = 1,20,000

Current ratio = Current assets / Current liabilities

= 1,20,000 / 1,60,000

= 0.75 : 1

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