Question

If the current ratio is 2.5 ,liquidity ratio is 1.6 and working capital 90000. Find the value of current assets, current liabilities and stock.

Answer 1

current ratio= current assets (c.a) /current liabilities(c.l)
2.5 =  C.A/ C.L 
C.A= 2.5 C.L 

WORKING CAPITAL = C.A - C.L
90000 = 2.5 C.L - C.L
90000 = 1.5 C.L
C.L =90000/1.5 = 60000 

W.C = C.A - 60000
90000 = C.A - 60000
C.A =90000+60000 =150000

LIQUIDITY RATIO = (C.A - STOCK)/C.L
1.6 = (150000- STOCK)/60000
1.6*60000 = 150000 - STOCK
96000 = 150000 - STOCK
STOCK = 150000-96000=54000

Answer 2

Current ratio

Explanation:

Given:

Current ratio = 2.5

Liquidity ratio = 1.6

Working capital = 90,000

Stock = ?

Current assets = ?

Current liabilities = ?

Computation:

Working capital = Current assets - Current Liabilities

90,000 = Current assets - Current Liabilities

Current assets = 90,000 + Current liabilities

Current ratio = Current assets / Current liabilities

2.5 = (90,000 + Current liabilities) / Current liabilities

2.5 Current liabilities = 90,000 + Current liabilities

1.5 Current liabilities = 90,000

Current liabilities = 60,000

Current assets = 40,000 + 40,000

Current assets = 90,000 + Current liabilities

Current assets = 90,000 + 60,000

Current assets = 150,000

Liquidity ratio  = (Current assets - Stock) / Current liabilities

1.6 = (150,000 - Stock) / 60,000

96,000 = 150,000 - Stock

Stock = 54,000

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