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A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000?
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A firm has a current ratio of 3:1. It's net working capital is Rs. 2,0...
Current Assets = 300000
Current liabilities = 100000
liquid Assets = 80000.
Current liabilities = 100000
liquid Assets = 80000.
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A firm has a current ratio of 3:1. It's net working capital is Rs. 2,0...
Solution:
Current Ratio:
The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. The formula for current ratio is:
Current Ratio = Current Assets / Current Liabilities
Given, the current ratio is 3:1. Therefore, we can say that:
Current Assets = 3x
Current Liabilities = x
Net Working Capital:
Net working capital is the amount by which a company's current assets exceed its current liabilities. The formula for net working capital is:
Net Working Capital = Current Assets - Current Liabilities
Given, the net working capital is Rs. 2,00,000. Therefore, we can say that:
3x - x = 2,00,000
2x = 2,00,000
x = 1,00,000
i) Current Assets:
Current Assets = 3x = 3 x 1,00,000 = Rs. 3,00,000
ii) Current Liabilities:
Current Liabilities = x = 1,00,000
iii) Liquid Assets:
Liquid Assets are those assets that can be easily converted into cash without significant loss. In this case, we assume that inventory is the only non-liquid current asset. Therefore, we can say that:
Liquid Assets = Current Assets - Inventory
= 3,00,000 - 2,20,000
= Rs. 80,000
Conclusion:
Therefore, the current assets of the firm are Rs. 3,00,000, current liabilities are Rs. 1,00,000, and liquid assets are Rs. 80,000.
Current Ratio:
The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. The formula for current ratio is:
Current Ratio = Current Assets / Current Liabilities
Given, the current ratio is 3:1. Therefore, we can say that:
Current Assets = 3x
Current Liabilities = x
Net Working Capital:
Net working capital is the amount by which a company's current assets exceed its current liabilities. The formula for net working capital is:
Net Working Capital = Current Assets - Current Liabilities
Given, the net working capital is Rs. 2,00,000. Therefore, we can say that:
3x - x = 2,00,000
2x = 2,00,000
x = 1,00,000
i) Current Assets:
Current Assets = 3x = 3 x 1,00,000 = Rs. 3,00,000
ii) Current Liabilities:
Current Liabilities = x = 1,00,000
iii) Liquid Assets:
Liquid Assets are those assets that can be easily converted into cash without significant loss. In this case, we assume that inventory is the only non-liquid current asset. Therefore, we can say that:
Liquid Assets = Current Assets - Inventory
= 3,00,000 - 2,20,000
= Rs. 80,000
Conclusion:
Therefore, the current assets of the firm are Rs. 3,00,000, current liabilities are Rs. 1,00,000, and liquid assets are Rs. 80,000.
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A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000?
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A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000?.
A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000?.
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