Question

liquid assets 75000,stock 10,000,prepaid expenses 5000, Working capital 30,000 calculate current ratio &liquid ratio
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Answer 1

Answer:

current ratio = 1.5 times

liquid ratio = 1.25 times

Explanation:

current assets = liquid assets + stock + prepaid expenses

= 75,000 + 10,000 + 5,000

= 90,000

working capital = current assets - current liabilities

30,000 = 90,000 - current liabilities

current liabilities = 60,000

current ratio = $\frac{current assets}{current liabilities}$

= $\frac{90,000}{60,000}$

= 1.5 times

liquid ratio = $\frac{liquid assets}{current liabilities}$

= $\frac{75,000}{60,000}$

= 1.25 times