21 :- Current Liabilities of a company are Rs 6,00,000. Its Current Ratio is 3:1 and Liquid Ratio is 1:1. Calculate value of inventory.
Solution :-
Current Liabilities = Rs 6,00,000
Current Ratio is 3 :1
Current Ratio = Current Assets/Current Liabilities
3 = C.A/C.L
C.A = 3 C.L
C.A = 3 x 6,00,000
C.A = Rs 18,00,000
Calculation of Inventories
Liquid Ratio = Quick Assets/Current Liabilities
1 = Current Assets – Inventories/Current Liabilities
1 = 18,00,000 – Inventories/6,00,000
6,00,000 = 18,00,000 – Inventories
Inventories = 18,00,000 – 6,00,000
= Rs 12,00,000