Question

Q.9) Current Liabilities of a Company are Rs. 3,50,000. Its Current Ratio is 3:1
and Acid Test Ratio is 1.75 : 1. Calculate the value of Current Assets, Liquid
Assets and Inventories.​

Answer 1

Answer:

Current Assets = ₹10,50,000

Liquid Assets = ₹6,12,500

Inventories = ₹4,37,500

Explanation:

Current Liabilities = ₹3,50,000

Let, Current Assets = X

Current Ratio = 3:1

Accordingly,

Current Assets/Current Liabilities = 3/1

Or, X/₹3,50,000 = 3/1

Or, X = ₹10,50,000

So, Current Asset = ₹10,50,000

Let, Inventories = Y

Acid Test Ratio = 1.75:1

Accordingly,

Current Assets - Inventories/Current Liabilities=1.75/1

Or, ₹10,50,000 - Y/₹3,50,000 = 1.75/1

Or, ₹10,50,000 - Y = ₹6,12,500

Or, - Y = ₹6,12,500 - ₹10,50,000

Or, - Y = - ₹4,37,500

Or, Y = ₹4,37,500

So, Inventories = ₹4,37,500

Liquid Assets = Current Assets - Inventories

= ₹10,50,000 - ₹4,37,500

= ₹6,12,500