A Ltd. has a Liquid Ratio of 3:1 and Current Ratio 4:1. Its inventories are of Rs 30,000. Find out the total current assets?
Answer & explanation
Correct answer: option 1
L.R = Liquid Assets/ Current Liabilities
C. R = Current assets / Current Liabilities
let's assume C.L = x
Then, C.A = 4x and L.A = 3x
Inventories= Current Assets- Liquid Assets
30,000 = 4x - 3x
30,000 = x = CL
C.R = C.A / C.L
4/1 = C.A / 30000
= 1,20,000