Question

Q.Current ratio of a firm is 3:1 & liquid ratio is 2:1 .Later on it was discovered that stock was taken as ₹60 000 instead of ₹40 000 .Calculate correct current & liquid ratio.​

Answer 1

Answer:

current ratio = current assets/ current liabilities cd

3/1=C.A./C.L.

C.A. = 3 C.L.

liquid ratio = liquid assets/current liabilities

2/1 = L.A./C.L.

L.A.= 2C.L.

inventory= C.A.-L.A.

60000= 3 C.L.-2 C.L.

60000= C.L.

C.A.= 3 C.L.

C.A.= 3×60000=180000

L.A.= 2 C.L.

L.A.= 2×60000=120000

Correct C.A.=

180000-60000+40000

=160000

Liquid assets = Current assets - inventory

= 160000 -40000

=120000

correct current ratio = 160000/60000

=2.67:1

correct liquid ratio = 120000/60000

=2:1

liquid ratio will remain same because inventory is not included in liquid assets

Answer 2

Answer:

Current Ratio = 2.67 : 1

Liquid Ratio = 2 : 1

Explanation:

When stock was taken as ₹ 60,000

Current Ratio =

$\sf{\dfrac{Current \: Assets}{Current \: Liabilities} = \dfrac{3}{1}}$

Liquid Ratio =

$\sf{\dfrac{Liquid \: Assets}{Current \: Liabilites} = \dfrac{2}{1}}$

Current Ratio :

Let,

Current Liabilities = x

Current assets = 3x

Liquid Ratio :

Current Liabilities = x

Liquid assets = 2x

Stock = Current assets - Liquid assets

⇒ 60,000 = 3x - 2x

⇒ 60,000 = x

⇒ x = 60,000

Current Liabilities = 60,000

Current assets = 3x

⇒ 60,000 × 3

Current assets = 1,80,000

Liquid assets = 2x

⇒ 60,000 × 2 = 1,20,000

Liquid assets = 1,20,000

When stock is taken ₹ 40,000

Current assets = 1,80,000

⇒ 1,80,000 - 60,000

⇒ 1,20,000

⇒ 1,20,000 + 40,000

⇒ 1,60,000

Current assets = 1,60,000

Current Ratio =

$\sf{\dfrac{Current \: Assets}{Current \: Liabilities} = \dfrac{1,60,000}{60,000} =\dfrac{2.67}{1}}$

Liquid assets = Current assets - Stock

⇒ 1,60,000 - 40,000

⇒ 1,20,000

Liquid Ratio =

$\sf{\dfrac{Liquid \: Assets}{Current \: Liabilites} = \dfrac{1,20,000}{60,000} = \dfrac{2}{1}}$

Therefore,

Current Ratio = 2.67 : 1

Liquid Ratio = 2 : 1