Handa Ltd.has inventory of Rs 20,000. Total liquid assets are Rs 1,00,000 and quick ratio is 2:1. Calculate current ratio.-ACCOUNTING RATIO

Handa Ltd.has inventory of Rs 20,000. Total liquid assets are Rs 1,00,000 and quick ratio is 2:1. Calculate current ratio.

Quick Ratio = `\frac{Liquid Asset}{Current Liabilities}`

or, 2 = `\frac{1,00,000}{Current Liabilities}`

or, Current Liabilities

= `\frac{1,00,000}{2}`

= 50,000

Current Asset = Liquid Asset + Inventory

                       =1,00,000 + 20,000

                       =1,20,000

Current Asset = `\frac{Current Asset}{Current Liabilities}`

= `\frac{1,20,000}{50,000}`

=`\frac{2.4}{1}`

= 2.4 : 1

Chapter-5 Accounting Ratios-II

4 5 6 7 8