A Company rsquo s Current Ratio is 2 8 1 Current Liabilities are Rs2 00 000 Inventory is Rs1 50 000 ...........

A Company’s Current Ratio is 2.8 : 1; Current Liabilities are Rs2,00,000; Inventory is Rs1,50,000 and Prepaid Expenses are Rs10,000. Its Liquid Ratio will be :

3.6 : 1

2.1 : 1

2 : 1

2.05 : 1

छोटे Courses बड़े Results

Master

Prepare through Micro-courses

Try Now

Explanation:

- Current Ratio is calculated by dividing Current Assets by Current Liabilities. In this case, the Current Ratio is given as 2.8:1, which means current assets are Rs5,60,000 (since Current Liabilities are Rs2,00,000).

- Liquid Assets exclude inventory and prepaid expenses. So, we subtract Inventory (Rs1,50,000) and Prepaid Expenses (Rs10,000) from Current Assets (Rs5,60,000) to get Rs4,00,000.

- Liquid Ratio or Quick Ratio is calculated by dividing Liquid Assets by Current Liabilities. Therefore, Liquid Ratio = Rs4,00,000 / Rs2,00,000 = 2:1.

- Option 3: 2:1 is the correct answer.