A Company rsquo s Quick Ratio is 1 8 1 Liquid Assets are Rs 5 40 000 and Inventory is Rs 1 50 000 It...........

General Accounting Principles Ratio analysis

A Company’s Quick Ratio is 1.8 : 1; Liquid Assets are Rs 5,40,000 and Inventory is Rs 1,50,000. Its Current Ratio will be :

2 : 1

2.3 : 1

1.8 : 1

1.3 : 1

A Company’s Quick Ratio is 1.8 : 1; Liquid Assets are Rs 5,40,000 and Inventory is Rs 1,50,000

Current Ratio = Current Assets/ current liabilities

= Rs. 6,90,000(WN1)

Rs.3,00,000{WN2}

= Rs. 6,90,000/ Rs,3,00,000

= 2.3 : 1

Working note 1 for current assets

current assets= liquid assets + inventory= Rs. 5,40,000 + Rs.1,50,000=Rs.6,90,000

Working note 2 for current liabilities

Current liabilities = liquid Assets/ current liabilities

liquid Assets = quick ratio

Current liabilities

Rs 5,40,000 =1.8

X 1

current Liabilities=Rs.5,40,000 / 1.8 =Rs.3,00,000

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