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Question
Calculate Current Ratio if:
Inventory is Rs 6,00,000; Liquid Assets Rs 24,00,000; Quick Ratio 2:1.
Solution
`"Quick Ratio" = "Liquid Assets"/"Current Liablities"`
or, `2 = "24,00,000"/"Current Liablities"`
`"Current Liablities" = "24,00,000"/2`
= `12,00,000`
Current Assets = Liquid Assets + Inventory
= `24,00,000 = 6,00,000`
= `30,00,000`
`"Current Ratio" = "Current Assets"/"Current Liablities"`
`= "30,00,000"/"12,00,000" = 2.5/1 = 2.5:1`
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