Current Liabilities of a company are Rs. 1,50,000. Its Current Ratio is 3 : 1 and Acid Test Ratio (Liquid Ratio) is 1 : 1. Calculate values of Current Assets, Liquid Assets and Inventory.

SOLUTION

Current ratio = Current assets / Current liabilities
 = 3 / 1

Acid test ratio = Liquid assets / Current liabilities
 = 1 / 1

Current Liabilities = 1,50,000
Current Assets = 3 × Current Liabilities
= 3 × 1,50,000 
= 4,50,000

Liquid Assets = 1 × 1,50,000 
= 1,50,000

Inventory = Current Assets − Liquid Assets
= 4,50,000 − 1,50,000
= 3,00,000


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