Question
Current Ratio 2.5 : 1, Quick Ratio 0.95 : 1, Current Assets ₹ 17,00,000. Calculate Current Liabilities, Quick Assets and Inventory.
✓
Answer
Current Ratio $=\frac{\text{Current Assets}}{\text{Current Liabilities}}$
2.5 (Given) $=\frac{₹\ 17,00,000\text{ (Given)}}{\text{Current Liabilities}}$
$\therefore$ Current Liabilities $=\frac{₹\ 17,00,000}{2.5}$
$=17,00,000\times\frac{10}{25}=₹\ 6,80,000$
Acid Test Ratio (Quick Ratio) $=\frac{\text{Liquid Assets}}{\text{Current Liabilities}}$
0.95 (Given) $=\frac{\text{Liquid Assets}}{₹\ \text{6,80,000 (Calculated as above)}}$
$\therefore$ Liquid Assets (Quick Assets) = ₹ 6,80,000 x 0.95 = ₹ 6,46,000
Inventory = Current Assets - Liquid Assets
= ₹ 17,00,000 - ₹ 6,46,000 = ₹ 10,54,000
2.5 (Given) $=\frac{₹\ 17,00,000\text{ (Given)}}{\text{Current Liabilities}}$
$\therefore$ Current Liabilities $=\frac{₹\ 17,00,000}{2.5}$
$=17,00,000\times\frac{10}{25}=₹\ 6,80,000$
Acid Test Ratio (Quick Ratio) $=\frac{\text{Liquid Assets}}{\text{Current Liabilities}}$
0.95 (Given) $=\frac{\text{Liquid Assets}}{₹\ \text{6,80,000 (Calculated as above)}}$
$\therefore$ Liquid Assets (Quick Assets) = ₹ 6,80,000 x 0.95 = ₹ 6,46,000
Inventory = Current Assets - Liquid Assets
= ₹ 17,00,000 - ₹ 6,46,000 = ₹ 10,54,000
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