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    Question

    The current ratio of a company is 1.5 times. Calculate

    the cash from the following information: Current liabilities              = Rs.50,000 Inventory                          = Rs.25,000 Receivables                       = Rs.35,000 Prepaid expenses               = Rs.5,000
    A Rs.15,000 Correct Answer Incorrect Answer
    B Rs.20,000 Correct Answer Incorrect Answer
    C Rs.75,000 Correct Answer Incorrect Answer
    D Rs.50,000 Correct Answer Incorrect Answer
    E Rs.10,000 Correct Answer Incorrect Answer

    Solution

    Current Ratio = Current assets/current liabilities Thus, current assets = current ratio * current liabilities                                                 = 1.5 * Rs.50,000                                                 = Rs.75,000 Current assets = inventory + receivables + prepaid expenses + cash Thus, Rs.75,000 = Rs.25,000 + Rs.35,000 + Rs.5,000 + cash Cash = Rs.10,000

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