SOLUTION
Quick Assets = 1,50,000
Inventory = 40,000
Prepaid Expenses = 10,000
Current Assets = Quick Assets + Inventory + Prepaid Expenses
= 1,50,000 + 40,000 + 10,000
= 2,00,000
Working Capital = Current Assets − Current Liabilities
1,20,000 = 2,00,000 − Current Liabilities
Current Liabilities = 80,000
Current ratio = Current assets / Current liabilities
= 2,00,000 / 80,000
= 2.5: 1