Calculation of Current Assets:

To calculate current assets, we can use the formula:

Current Assets = Current Ratio x Current Liabilities

Given that the current ratio of the company is 2.5:1 and the current liabilities are ₹1,00,000, we can calculate the current assets as follows:

Current Assets = 2.5 x ₹1,00,000
Current Assets = ₹2,50,000

Therefore, the current assets of the company are ₹2,50,000.

Calculation of Liquid Ratio:

To calculate the liquid ratio, we can use the formula:

Liquid Ratio = (Current Assets - Stock) / Current Liabilities

Given that the stock of the company is ₹1,20,000 and the current liabilities are ₹1,00,000, we can calculate the liquid ratio as follows:

Liquid Ratio = (₹2,50,000 - ₹1,20,000) / ₹1,00,000
Liquid Ratio = ₹1,30,000 / ₹1,00,000
Liquid Ratio = 1.3:1

Therefore, the liquid ratio of the company is 1.3:1.

Explanation:

The current ratio is a measure of a company's ability to pay its short-term debts using its current assets. A higher current ratio indicates a better ability to meet its short-term obligations. In this case, the company's current ratio is 2.5:1, which means that it has 2.5 times more current assets than current liabilities.

The liquid ratio, also known as the acid-test ratio, is a more stringent measure of a company's ability to pay its short-term obligations. It excludes inventory from current assets, as inventory may not be easily converted to cash. A higher liquid ratio indicates a better ability to pay short-term obligations without relying on inventory sales. In this case, the company's liquid ratio is 1.3:1, which means that for every ₹1 of current liabilities, it has ₹1.3 of liquid assets that can be easily converted to cash.

Overall, the company seems to be in a good position with a high current ratio and a reasonable liquid ratio. However, it is important to note that these ratios should be compared with industry standards and analyzed in the context of the company's operations and financial goals.