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Question
Handa Ltd.has inventory of Rs 20,000. Total liquid assets are Rs 1,00,000 and quick ratio is 2:1. Calculate current ratio.
Solution
`"Quick Rtaio" = "Liquid Assets"/"Current Liablities"`
Or, `2 = "1,00,000"/"Current Liablities"`
`or, "Current Liablities" = "1,00,000"/2`
= `50,000`
Current Assets = Liquid Assets + Inventory
= 1,00,000 + 20,000
= 1,20,000
`"Current Ratio" = "Current Assets"/"Current Liablities"`
= `"1,20,000"/"50,000"`
=`"2.4"/1"="2.4 : 1`
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