Question

liquid assets 40000 stock 6000 prepaid expenses 2000 long term debt 20000 total debt 40000 calculate current ratio and liquid ratio (current ratio 2.4:1 liquid ratio 2:1 and) plz solve​

Answer 1

Answer:

Current Ratio =2.4:1. Liquid Ratio =2:1

Explanation:

Current Ratio= Current Assets/ Current liability

Current Assets = Liquid Assets+Prepaid Expenses+ Stock =40000+2000+6000=48000.

Current liability =Total debt- long term debt =40000-20000=20000.

Current Ratio = 48000/20000=2.4:1.

Liquid Ratio = Liquid Assets/Current liability =40000/20000=2:1.