Accountancy, asked by amu249312, 11 months ago

liquid assets 60000, stock 10000, pre paid expenses 4000, working capital 50000, calculate current assets ratio and liquid assets ratio​

Answers

Answered by hamail
16

Answer:

current ratio-3.08:1

liquid ratio-2.5:1

Attachments:
Answered by ColinJacobus
9

\fontsize{18}{10}{\textup{\textbf{Current asset ratio=3.08, liquid asset ratio is 2.5.}}}

Explanation:

Liquid Assets       = 60,000

Stock                     = 10,000

Prepaid Expense =  4,000

Working Capital   = 50,000

We know that

\textup{Current Assets Ratio} =\dfrac{\textup{Current Assets}}{\textup{Current Liabilities}}

and

\textup{Liquid Assets} = \textup{Current Assets}-\textup{Stock+Prepaid Expenses}\\\\\Rightarrow 60,000 = \textup{Current Assets}-(10,000+4000)\\\\\Rightarrow60,000 = \textup{Current Assets}-14,000\\\\\Rightarrow60,000+14,000 = \textup{Current Assets}\\\\ \therefore\textup{Current Assets} = 74,000.

So,

\textup{Working Capital}=\textup{Current Assets}-\textup{Current Liabilities}\\\\\Rightarrow50,000=74,000-\textup{Current Liabilities}\\\\\textup{Current Liabilities}=74,000-50,000\\\\\textup{Current Liabilities}=24,000.

\textup{Current Assets Ratio} =\dfrac{Current Assets}{Current Liabilities}

\textup{Current Assets Ratio}=\dfrac{74,000}{24,000}\\\\\textup{Current Assets Ratio}=3.08.

\textup{Liquid Assets Ratio}=\dfrac{\textup{Liquid Assets}}{\textup{Current Liabilities}}=\dfrac{60,000}{24,000}=2.5.

Thus, required current asset ratio is 3.08 and liquid asset ratio is 2.5.

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