22 :- Umesh Ltd. Has Current Ratio of 4.5 : 1 and a Quick Ratio of 3:1. If its inventory is Rs 36,000, find out its total Current Assets and Current Liabilities.
Solution :-
Current Ratio = Current Assets/Current Liabilities
4.5 = C.A/C.L
4.5 C.L = C.A — Eq 1
Quick Ratio = Quick Assets/Current Liabilities
= Current Assets – Inventories/Current Liabilities
3 = C.A – 36,000/C.L
3 C.L = C.A – 36,000 — Eq 2
From Equation 1 and 2
3 C.L = 4.5 C.L – 36,000
1.5 C.L = 36,000
Current Liabilities = Rs 24,000
Putting Current Liabilities (C.L) value in Equation 1
4.5 C.L = C.A
C.A = 4.5 x 24,000
C.A = Rs 1,08,000
Quick Assets = Current Assets – Inventories
= 1,08,000 – 36,000
= Rs 72,000