On the basis of following data the liquid ratio of a company will be Current Ratio 5 3 Current Liabi...........

General Accounting Principles Ratio analysis

On the basis of following data, the liquid ratio of a company will be : Current Ratio 5 : 3; Current Liabilities Rs 75,000 and Inventory Rs 25,000

1 : 1

2:1.8

3 : 2

4 : 3

Current Ratio 5 : 3; Current Liabilities Rs 75,000 and Inventory Rs 25,000

Liquid Ratio = liquid Assets/ current liabilities

= Rs.1,00,000(WN1)

Rs.75,000

= Rs.1,00,000/ Rs.75,000

= 4 : 3 (answer)

Working note 1 for liquid assets

liquid assets= current assets - inventory= Rs1,25,000- Rs.25,000=Rs.1,00,000

Working Note 2 for current assets

Current assets = liquid Assets/ current liabilities

current Assets = current ratio

Current liabilities

X =5

Rs 75,000 3

current assets=Rs 75,000? * 5 =Rs.3,75,000/ 3= Rs. 1,25,000

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