The following information of a company is given
Current ratio=2.5:1
Acid test ratio=1.5:1
Current liabilities=50,000
Current asset,
Liquid asset,
Inventory
Answers
Answer:
Given,
Current ratio = 2.5 : 1
Quick Ratio = 1.5 : 1
Net working capital = 60,000
Net working capital = Current assets - Current liabilities
Current Assets = Net working capital + Current liabilities
= 60,000 + Current liabilities (1)
Current ratio = Current assets
-------------------------
Current liabilities
Current Assets = Current liabilities x 2.5 (2)
Merging equation (1) and (2)
60,000 + Current liabilities = 2.5Current liabilities
60,000 = 2.5 current liabilities - Current liabilities
60,000 = 1.5 Current liabilities
Current liabilities = 60,000
--------------
1.5
= 40,000
Therefore, current liabilities =40,000