Question

The current ratio of the company is 4:1 if liquid ratio is 1.5:1. the inventories were RS 150000. Find its current assets, current liabilities and liquid assets.​

Answer 1

Current ratio = Current asset / Current liabilities = 80000/50000 = 1.6Quick ratio = Quick assets / Current liabilities = 60000/ 50000 = 1.2Current Assets = Trade receivables + Cash in hand + Cash at Bank + Inventories + Advance Tax = 30000 + 10000 + 10000 + 20000 + 1000 = 80000Quick Assets = Current Assets - Inventories = 80000-20000 = 60000Current Liabilities = 50000.

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Answer 2

current asset ratio is found by dividing a company's total current assets by its total current liabilities.