A Company rsquo s Current Ratio is 2 5 1 and Liquid Ratio is 1 6 1 If its Current Assets are Rs 7 50...........

General Accounting Principles Ratio analysis

A Company ’ s Current Ratio is 2.5 : 1 and Liquid Ratio is 1.6 : 1. If its Current Assets are Rs 7,50,000, what will be the value of Inventory?

Rs 4,50,000

Rs 4,80,000

Rs 2,70,000

Rs 1,80,000

Current Ratio is 2.5 : 1 and Liquid Ratio is 1.6 : 1. If its Current Assets are Rs 7,50,000

INVENTORY= current assets - liquid assets

=Rs. 7,50,000(WN2)- Rs. 4,80,000(WN1)=Rs2,70,000(ANSWER)

Working note 1 for liquid Ratio:

liquid ratio= liquid assets/current liabilities

= liquid assets =1.6

Rs. 3,00,000 1

LIQUID ASSETS= Rs. 3,00,000*1.6=Rs. 4,80,000

Working Note 2 for current LIABILITIES

Current assets = liquid Assets/ current liabilities

current Assets = current ratio

Current liabilities

Rs. 7,50,000 =2.5

X 1

current assets=Rs 7,50,000 / 2.5 =Rs.3,00,000

By: Abhipedia

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