A Company rsquo s Quick Ratio is 1 5 1 Current Liabilities are Rs 2 00 000 and Inventory is Rs 1 80 ...........

General Accounting Principles Ratio analysis

A Company’s Quick Ratio is 1.5 : 1; Current Liabilities are Rs 2,00,000 and Inventory is Rs 1,80,000. Current Ratio will be :

0.9 : 1

1.9 : 1

1.4 : 1

2.4 : 1

If Rs.1,80,000 is inventory it will increase current assets .Hence, new ratio will be:-

Current Ratio = Current Assets/ current liabilities

=3,00,000(WN 1) +1,80,000

Rs.2,00,000

= 4,80,000/ 2,00,000

= 2.4:1

Working note for current assets

Current Ratio = Current Assets/ current liabilities

Current Assets = current ratio

Current liabilities

x =1.5

Rs. 2,00,000 1

current Assets=Rs2,00,000 /1.5=Rs.3,00,000

By: Abhipedia

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