Question

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

Answer 1

Current Ratio = \(\frac {\textit{Current assets}}{\textit{Current Liabilities}} \)

or \(\frac{4.5}{1}\) = \(\frac {\textit{Current assets}}{\textit{Current Liabilities}} \)

or, 4.5 Current Liabilities = Current Assets

Quick Ratio = \(\frac {\textit{Quick assets}}{\textit{Current Liabilities}} \)

or, 3 Current Liabilities = Quick Assets

Quick Assets = Current Assets – Stock

= Current Assets – 36,000

or, 4.5 Current Liabilities – 3 Current Liabilities 

= 36,000

or, 1.5 Current Liabilities = 36,000 or, Current Liabilities 

= 24,000

Current Assets = 4.5 current Liabilities 

or, Current Assets = 4.5 × 24,000 

= 1,08,000.