Question

X ltd has a current ratio of3.5:1 and quick ratio of 2:1.if excess of current assets over quick assets is24000

Answer 1

Explanation:

current ratio = 3;5;1

quick ratio = 2:1

let current liabilities = x

current assets = 3.5x and

quick assets = 2x

inventory = current assets - quick assets

24000 = 3.5x - 2x

24000 = 1.5x

x = rs 16000

current assets = 3.5 x = 3.5 × 16000 = Rs 56000

verification : current ratio = current assets : current liabilities

Rs 56000 : rs 16000

3:5:1

quick ratio = quick assets: current liabilities

rs 32000: rs 16000

2 :1