A business has a Current Ratio of 4:1 and a Quick ratio of 1.2:1 if the working capital 180000 calculate the total current assets and inventory
Share
A business has a Current Ratio of 4:1 and a Quick ratio of 1.2:1 if the working capital 180000 calculate the total current assets and inventory
Sign Up to our social questions and Answers Engine to ask questions, answer people’s questions, and connect with other people.
Login to our social questions & Answers Engine to ask questions answer people’s questions & connect with other people.
Answer:
★ Solution :
Current Ratio=Current asset/Current liabilities=3/1(cross multiplication)
Current assets= 3Current liabilities.
Working capital = CA - CL
180000 = (3CL) - CL
180000 = 2CL
Current liabilities= 180000/2 = 90000.
Now,put the value of CL....
Current assets= 3 × 90000= 27000.
CURRENT ASSETS = 270000.
Liquid ratio = Liquid asset/current liabilities=1.2/1 (cross multiplication)
Liquid assets = 1.2Current liabilities
Liquid assets = 1.2 × 90000= 108000.
Liquid assts = Current assets - inventory
108000 = 270000 - inventory
Inventory = 270000 -108000 =162000.
Inventory = 162000
Hope it helps you ♥