Question

Sunil Industries has Liquid Ratio 2:1. If its Stock is 20.000 and total Current
Liabilities are 50,000, find out its Current Ratio.
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Answer 1

Explanation:

Liquid Ratio = [Current Assets - Stock]/ Current Liabilities

 2    = [Current Assets - 20,000]/ 50,000

 1,00,000 = Current Assets - 20,000

Current Assets = 1,00,000 + 20,000

Therefore,

Current Assets = Rs.1,20,000

Now,

Current Ratio = Current assets/Current liabilities

                        = 1,20,000 / 50,000

                         = 2.4 : 1

Answer 2

Answer:

Current Ratio = 2.4 : 1

Explanation:

Given :

Liquid Ratio 2 : 1

Stock = 20,000

Total Current Liabilities = 50,000

To find :

Current Ratio

Solution :

Current Ratio :

$\sf{Current\:Ratio \: = \frac{Current \: Assets}{Current\: Liabilities}}$

Current Liabilities = 50,000

Find Current assets

Liquid Ratio 2 : 1

$\sf{Liquid\:Ratio \: = \dfrac{Quick \: Assets}{Current\: Liabilities}}$

Current Liabilities = 50,000

Quick assets = 50,000 × 2

⇒ 1,00,000

Quick assets = 1,00,000

Current assets = Quick assets + Stock

⇒ 1,00,000 + 20,000

⇒ 1,20,000

Current assets = 1,20,000

Current liabilities = 50,000

So,

Current Ratio =

$\sf{Current\:Ratio = \: \dfrac{Current \:Assets}{Current \: Liabilities}}$

$\sf{Current Ratio = \: \dfrac{1,20,000}{50,000}}$

Current Ratio = 2.4 : 1