In case Current Assets are Rs.4,50,000; Current Liabilities are Rs.2,00,000 and Inventory is Rs.50,000, what will be the Liquid Ratio ?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 2 : 1
The liquid (quick) ratio compares the assets that can be turned into cash quickly with the current liabilities. Inventory is left out of current assets because it takes time to sell.
Liquid assets = Rs. 4,50,000 − Rs. 50,000 = Rs. 4,00,000
Liquid ratio = Rs. 4,00,000 ÷ Rs. 2,00,000 = 2 : 1
NCERT (2026-27 edition):
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