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    Question

    A company has a Current Ratio of 2.5:1 and Liquid Ratio

    of 1.5:1. If its Current Liabilities are ₹4,00,000, the value of Inventory will be:
    A ₹6,00,000 Correct Answer Incorrect Answer
    B ₹10,00,000 Correct Answer Incorrect Answer
    C ₹4,00,000 Correct Answer Incorrect Answer
    D ₹2,00,000 Correct Answer Incorrect Answer

    Solution

    Current Assets = Current Ratio × Current Liabilities = 2.5 × 4,00,000 = ₹10,00,000. Liquid Assets (Quick Assets) = Liquid Ratio × Current Liabilities = 1.5 × 4,00,000 = ₹6,00,000. Inventory = Current Assets – Liquid Assets = 10,00,000 – 6,00,000 = ₹4,00,000.

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