Subject:
AccountancyAuthor:
oliver69Created:
1 year agoAnswer:
Hope this helps :)
Author:
casimirozfln
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7Given:
To find: The current ratio and liquid ratio.
Answer:
Current Ratio:
Current ratio = Current assets ÷ Current liabilities
The current assets and the current liabilities are directly given. Substituting them into the formula above,
Current ratio = Rs 35,000 ÷ Rs 17,500
Current ratio = 2:1
Liquid Ratio:
Liquid ratio = Liquid assets/Quick assets ÷ Current liabilities
We only have the current liabilities. We need to find the liquid assets.
Liquid assets = Current assets - Inventory
Liquid assets = Rs 35,000 - Rs 15,000
Liquid assets = Rs 20,000
Now that we have both the values, let's substitute them into the formula.
Liquid ratio = Rs 20,000 ÷ 17,500
Liquid ratio = 1.14:1
Therefore, the current ratio and the liquid ratio are 2:1 and 1.14:1 respectively.
Author:
irenemorrison
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