Calculate liquidity ratios from the following information :Total Curre

1.	Calculate liquidity ratios from the following information :Total Current AssetsRs 1,80,000Stock (included in current assets)Rs 60,000Prepaid ExpensesRs 6,000Current LiabilitiesRs 1,20,000
Answer» (A). Current ratio = Current Assets / Current liabilities = (Rs 1,80,000 / Rs 1,20 000) = 3 : 2 or 1.5 : 1 B. Liquid ratio = (Current Assets – Stock - Prepaid Expenses) / Current liabilities = (1,80,000 – 60,000 – 6,000) / 1,20,000 = 0.95

Calculate liquidity ratios from the following information :Total Current AssetsRs 1,80,000Stock (included in current assets)Rs 60,000Prepaid ExpensesRs 6,000Current LiabilitiesRs 1,20,000

Answer»

(A). Current ratio = Current Assets / Current liabilities

= (Rs 1,80,000 / Rs 1,20 000)

= 3 : 2 or 1.5 : 1

B. Liquid ratio = (Current Assets – Stock - Prepaid Expenses) / Current liabilities

= (1,80,000 – 60,000 – 6,000) / 1,20,000 = 0.95