Question

liquid asset $6,80,000, Inventories $1,90,000 , prepaid expenses $10,000, working assets $2,00,000. calculate the current ratio and quick ratio

Answer 1

Working Capital = Current Assets – Current Liabilities

200,000=(680,000+190,000+10,000)$-$ Current Liabilities

Current Liabilities =680,000

Current Ratio = C.A : C.L

Current Ratio =680,000:680,000

Current Ratio =1:1

$Quick Ratio =\frac {Quick Assets} {Current Liabilities}$

Quick Ratio =$\frac {880,000}{680,000} =1.29times$