X Y Z Limited’s Inventory is Rs. 3,00,000. Total Liquid Assets are Rs. 12,00,000 and Quick Ratio is 2: 1. Work out Current Ratio.

SOLUTION

Quick ratio = Quick Assets / Current assets
= 2: 1

Quick Assets = 12,00,000
Current liabilities Quick assets / 2 = 12,00,000 / 2
= 6,00,000

Current Assets = Quick Assets + Stock
= 12,00,000 + 3,00,000
= 15,00,000

Current ratio = Current assets  /  Current liabilities
= 15,00,000 / 6,00,000
= 2.5: 1


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