Question

Shine Limited has a current ratio 4.5 : 1 and quick ratio 3 : 1; if the inventory is 36,000, calculate Current Liabilities and Current Assets.

Answer 1

Quick Assets = 3 × Current Liabilities
Quick Assets = Current Assets – Inventory
Quick Assets = Current Assets – ₹ 36,000
3 × Current Liabilities = 4.5 × Current Liabilities – ₹ 36,000
4.5 × Current Liabilities – 3 × Current Liabilities = ₹ 36,000
1.5 × Current Liabilities = ₹ 36,000
Current Liabilities = ₹ 36,000/1.5 = ₹ 24,000
Current Assets = 4.5 × Current Liabilities = 4.5 × ₹ 24,000 = ₹ 1,08,000