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answer this question From the following data, Calculate currents ratio and liquid ratio Liquid assets 1,50,000 Inventories (includes Loose tools 40,000) 70,000 Prepaid expenses 20,000 Workmg Capital

CURRENT ASSETS = LIQUID ASSETS + INVENTORIES - LOOSE TOOLS + PREPAID EXPENSES = 1,50,000 + 70,000 - 40,000 + 20,000 = 2,00,000
WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES
1,20,000 = 2,00,000 - CURRENT LIABILITIES
CURRENT LIABILITIES = 2,00,000 - 1,20,000 = 80,000
CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES = 2,00,000 / 80,000 = 2.5 : 1
LIQUID RATIO = LIQUID ASSETS / CURRENT LIABILITIES = 1,20,000 / 80,000 = 1.5 : 1
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But liquid assets in the question is rs. 150000 so y have u taken liquid assets as rs. 120000 while calculating the quick ratio?@sakshiagarwal
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SORRY BY MISTAKE WRITTEN THAT
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CURRENT ASSETS = LIQUID ASSETS + INVENTORIES - LOOSE TOOLS + PREPAID EXPENSES = 1,50,000 + 70,000 - 40,000 + 20,000 = 2,00,000 WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES 1,20,000 = 2,00,000 - CURRENT LIABILITIES CURRENT LIABILITIES = 2,00,000 - 1,20,000 = 80,000 CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES = 2,00,000 / 80,000 = 2.5 : 1 LIQUID RATIO = LIQUID ASSETS / CURRENT LIABILITIES = 1,50,000 / 80,000 = 1.87 : 1
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