Advertisements
Advertisements
Question
A business has a current ratio of 3 : 1 and quick ratio of 1.2 : 1. If the working capital is Rs 1,80,000, calculate the total Current Assets and value of stock.
Solution
`"Current Ratio"= "Current Assest"/"Current Liabilities"=3:1`
Or,`3/1="Current Assest"/"Current Liabilities"`
Or, Current Assets = 3 × Current Liabilities
Working Capital = Current Assets − Current Liabilities
Or, 1,80,000 = Current Assets − Current Liabilities
Or, 1,80,000 = 3 Current Liabilities − Current Liabilities
Or, 1,80,000 = 2 Current Liabilities
Or, Current Liabilities = Rs 90,000
∴Current Assets = 3 × 90,000 = Rs 2,70,000
`"Quick Ratio"="Quick Assets"/"Current Liabilities"`
Quick Ratio = 1.2 : 1
Quick Assets = Current Assets − Stock
Or, Quick Assets = 90,000 − Stock
Current Liabilities = Rs 90,000
`1.2/1=(2,70,000-"stock")/(90,000)`
Or, 1,08,000 = 2,70,000 − Stock
Stock = Rs 1,62,000
APPEARS IN
RELATED QUESTIONS
The current ratio of X. Ltd is 2:1. State with reason which of the following transaction would
i. Increase or ii. decrease or iii. not change the ratio
1. Included in the trade payables was a bills payable of Rs.9,000 which was met on maturity.
2. Company issued 1,00,000 equity shares of Rs.10 each to the Vendors of machinery purchased.
What is meant by 'Liquidity of Business'?
O.M. Ltd has a Current Ratio of 3.5 : 1 and Quick Ration of 2 : 1. If the excess of Current Assets over Quick Assets as represented by Stock is Rs 1,50,000, calculate Current Assets and Current Liabilities.
From the given information calculate the Stock turnover ratio. Sales Rs 2,00,000; G.P: 25% on cost; Stock at the beginning is 1/3 of the stock at the end which was 30% of sales.
Current ratio of Adaar Ltd. is 2.5:1. Accountant wants to maintain it at 2:1. Following options are available.
- He can repay Bills Payable
- He can purchase goods on credit
- He can take short term loan
Which of the following is not included in cash and cash equivalents?
A Company's Current Liabilities decreased from ₹ 12,00,000 to ₹ 9,00,000. What is the percentage of change in Current Liabilities?
Which one of-the following statement is incorrect?
______ is included in current assets while preparing balance sheet as per revised Schedule III but excluded from current assets while calculating Current Ratio.
A company had Current Assets of ₹ 3,00,000 and Current Liabilities of ₹ 1,50 000, having a Current Ratio of 2:1. What will be the company's revised Current Ratio after it collects ₹ 20,000 cash from its debtors of ₹ 25,000, the remaining debtors being bad?
State with reason whether Provision for Doubtful Debts is subtracted from Trade Receivables while computing Current Ratio.
Calculate the Current Ratio (up-to two decimal places) of Windlas Biotech Ltd. from the following extract of its Annual Report of 2021-22.
| Particulars | (₹) (in millions) |
| Opening Inventory of consumables (raw materials) | 264.79 |
| Closing Inventory of consumables (raw materials) | 389.85 |
| Opening Inventory of finished goods and work-in-progress | 149.82 |
| Closing Inventory of finished goods and work-in-progress | 197.24 |
| Current Assets (other than inventory of consumables and of finished goods and work-in-progress) | 3,229.23 |
| Current Liabilities | 936.52 |
A company had Current Assets of ₹ 3,00,000 and Current Liabilities of ₹ 1,50,000, having a current Ratio of 2 : 1. What will be its revised Current Ratio after it endorses a bills receivable of ₹ 40,000 to one of its creditors?
From the following particulars of NB Ltd., calculate its Cost of Revenue from Operations for the year 2023-24.
| Particulars | |
| Current Assets | ₹ 6,80,000 |
| Current Liabilities | ₹ 3,40,000 |
| Quick Ratio | 1.5 : 1 |
| Inventory Turnover Ratio | 4 times |
