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Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,000 calculate current asset, current liabilities, inventory, liquid asset?
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Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,...
Given Data
- Current Ratio: 3.5 times
- Liquid Ratio: 2.5 times
- Working Capital: 1,00,000
Definitions
- Current Assets (CA): Assets that can be converted into cash within a year.
- Current Liabilities (CL): Obligations due within a year.
- Liquid Assets: Current assets minus inventory.
Calculations
1. Current Liabilities (CL)
- Current Ratio formula:
CA / CL = 3.5
- Rearranging gives:
CA = 3.5 * CL
2. Working Capital (WC)
- Working Capital formula:
WC = CA - CL
- Given WC = 1,00,000, we can express it as:
1,00,000 = CA - CL
3. Substituting CA in WC equation
- Substitute CA from the current ratio:
1,00,000 = (3.5 * CL) - CL
- This simplifies to:
1,00,000 = 2.5 * CL
- Thus,
CL = 1,00,000 / 2.5 = 40,000
4. Calculating Current Assets (CA)
- Now substitute CL back to find CA:
CA = 3.5 * 40,000 = 1,40,000
5. Calculating Liquid Assets
- Liquid Ratio formula:
Liquid Assets / CL = 2.5
- Rearranging gives:
Liquid Assets = 2.5 * CL
- Therefore,
Liquid Assets = 2.5 * 40,000 = 1,00,000
6. Calculating Inventory
- Inventory = Current Assets - Liquid Assets
- Inventory = 1,40,000 - 1,00,000 = 40,000
Summary
- Current Assets: 1,40,000
- Current Liabilities: 40,000
- Inventory: 40,000
- Liquid Assets: 1,00,000
These calculations provide a clear view of the financial position based on the given ratios and working capital.
- Current Ratio: 3.5 times
- Liquid Ratio: 2.5 times
- Working Capital: 1,00,000
Definitions
- Current Assets (CA): Assets that can be converted into cash within a year.
- Current Liabilities (CL): Obligations due within a year.
- Liquid Assets: Current assets minus inventory.
Calculations
1. Current Liabilities (CL)
- Current Ratio formula:
CA / CL = 3.5
- Rearranging gives:
CA = 3.5 * CL
2. Working Capital (WC)
- Working Capital formula:
WC = CA - CL
- Given WC = 1,00,000, we can express it as:
1,00,000 = CA - CL
3. Substituting CA in WC equation
- Substitute CA from the current ratio:
1,00,000 = (3.5 * CL) - CL
- This simplifies to:
1,00,000 = 2.5 * CL
- Thus,
CL = 1,00,000 / 2.5 = 40,000
4. Calculating Current Assets (CA)
- Now substitute CL back to find CA:
CA = 3.5 * 40,000 = 1,40,000
5. Calculating Liquid Assets
- Liquid Ratio formula:
Liquid Assets / CL = 2.5
- Rearranging gives:
Liquid Assets = 2.5 * CL
- Therefore,
Liquid Assets = 2.5 * 40,000 = 1,00,000
6. Calculating Inventory
- Inventory = Current Assets - Liquid Assets
- Inventory = 1,40,000 - 1,00,000 = 40,000
Summary
- Current Assets: 1,40,000
- Current Liabilities: 40,000
- Inventory: 40,000
- Liquid Assets: 1,00,000
These calculations provide a clear view of the financial position based on the given ratios and working capital.
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Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,000 calculate current asset, current liabilities, inventory, liquid asset?
Question Description
Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,000 calculate current asset, current liabilities, inventory, liquid asset? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,000 calculate current asset, current liabilities, inventory, liquid asset? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,000 calculate current asset, current liabilities, inventory, liquid asset?.
Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,000 calculate current asset, current liabilities, inventory, liquid asset? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,000 calculate current asset, current liabilities, inventory, liquid asset? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Current ratio 3.5 times, liquid ratio 2.5 times, working capital=1,00,000 calculate current asset, current liabilities, inventory, liquid asset?.
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