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X Ltd. has a current ratio of 3.5:1 and quick ratio of 2:1. If excess of current assets over quick assets represented by Inventory is Rs.24,000, calculate current assets and current liabilities. |
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Answer» Current Ratio = 3.5:1 Quick Ratio = 2:1 Let Current Liabilities = x Current Assets = 3.5x And Quick Assets = 2x Inventory = Current Assets – Quick Assets 24,000 = 3.5 x – 2x 24,000 = 1.5x x = Rs.16,000 Current Assets = 3.5x = 3.5 x Rs.16,000 = Rs.56,000. Verification : Current Ratio = Current Assets : Current Liabilities = Rs.56,000 : Rs.16,000 = 3.5 : 1 Quick Ratio = Quick Assets : Current Liabilities = Rs.32,000 : Rs.16,000 = 2:1 |
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