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Question
Calculate 'Liquid Ratio' from the following information:
Current Liabilities Rs. 50,000, Current Assets Rs. 80,000, Stock Rs.25,000, Prepaid Expenses Rs.5,000
Options
1 : 1
2 : 1
3 : 1
2 : 3
MCQ
Solution
1 : 1
Explanation:
Liquid Assets = Current Assets - Closing Stock - Prepaid Expenses
= Rs. 80,000 - Rs. 25,000 - Rs. 5,000
= Rs. 50,000
Liquidity Ratio = Liquid Assets : Current Liabilities
= Rs. 50,000 : Rs. 50,000
= 1 : 1
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Types of Ratios
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