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Question 16 Chapter 4 of +2-B
I. Liquidity Ratios
16. (Quick Ratio given ) Quick ratio 1.5, Current Assets ₹ 1,00,000; Current Liabilities ₹ 40,000. Calculate the value of Inventory.
Solution: - (a)
| Current Ratio | = | 1.5 : 1 |
| Current Assets | = | Current Assets |
| Current Liabilities |
| Current Liabilities | = | ₹ 1,00,000 |
| ₹ 40,000 | ||
| = | 2.5: 1 |
| Inventories | = | Current Assets –Quick Assets |
| Quick Assets* | = | ₹ 40,000 X 1.5 |
| = | ₹ 60,000 | |
| Inventories | = | ₹ 1,00,000 - ₹ 60,000 |
| = | ₹ 40,000 |
* Quick Ratio is 1.5: 1 shows that quick assets are 1.5 times of current liabilities.
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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