Calculate current ratio and quick ratio from the following information Inventory 50,000 trade receivable 50,000 advance tax 4000 cash and cash equivalents 30,000 trade payable 100000 short-term borrowings 4000

Calculate current ratio and quick ratio from the following information

1.	Calculate current ratio and quick ratio from the following information Inventory 50,000 trade receivable 50,000 advance tax 4000 cash and cash equivalents 30,000 trade payable 100000 short-term borrowings 4000
Answer» Current RATIO= 1.29:1 and Quick Ratio = 0.77:1Explanation:1. Current Ratio =Current Assets/Current LiabilitiesCurrent Assets = Inventories + Trade RECEIVABLES + Advance TAX + Cash and cash equivalents=Rs. 50,000 + Rs. 50,000 + Rs. 4,000 + Rs. 30,000 = Rs. 1,34,000Current LIABILITIES = Trade PAYABLE + Short-term borrowings= Rs. 1,00,000 + Rs. 4,000 = Rs. 1,04,000Current Ratio =Rs.1,34,000/ Rs.1,04,000= 1.29 :12. Quick Ratio = Quick Assets/Current LiabilitiesQuick Assets = Current assets – (Inventories + Advance tax)= Rs. 1,34,000 – (Rs. 50,000 + Rs. 4,000) =Rs. 80,000Current Liabilities = Rs. 1,04,000Quick Ratio = Rs. 80,000/ Rs. 1,04,000= 0.77 :1

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Calculate current ratio and quick ratio from the following information Inventory 50,000 trade receivable 50,000 advance tax 4000 cash and cash equivalents 30,000 trade payable 100000 short-term borrowings 4000

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