If a Company rsquo s Current Liabilities are Rs 80 000 Working Capital is Rs 2 40 000 and Inventory ...........

General Accounting Principles Ratio analysis

If a Company’s Current Liabilities are Rs 80,000; Working Capital is Rs 2,40,000 and Inventory is Rs 40,000, its quick ratio will be:

3.5 : 1

4:1

4.5:1

3:1

Current Liabilities are Rs 80,000; Working Capital is Rs 2,40,000 and Inventory is Rs 40,000

liquid ratio= quick assets/ current liabilities

= RS. 2,80,000(WN2)/ Rs.80,000(WN1)

= 3.5 : 1 (ANSWER)

working note1 for current liabilitieS

WORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES

CURRENT ASSETS= WORKING CAPITAL + CURRENT LIABILITIES

= Rs.2,40,,000+Rs. 80,000

CURRENT ASSETS= Rs. 3,20,000

Working Note 2 for liquid assets

quick ratio = liquid Assets/ current liabilities

liquid assets= current assets-inventory

=Rs. 3,20,000-RS. 40,000

=RS. 2,80,000

By: Abhipedia

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