Question
From the following compute:
- Current Ratio.
- Quick Ratio.
✓
Answer
- Current Ratio $=\frac{\text{Current Assets}}{\text{Current Liabilities}}$
= ₹ 80,000 + ₹ 4,10,000 + ₹ 3,30,000 + ₹ 10,000 + ₹ 18,000 = ₹ 20,000 + ₹ 28,000
= ₹ 8,96,000
Current Liabilities = Trade Payables + Short term Borrowings + Short term Provisions + Other Current Liabilities.
= ₹ 1,80,000 + ₹ 60,000 + ₹ 25,000 + ₹ 15,000
= ₹ 2,80,000
Current Ratio $=\frac{₹\ 8,96,000}{₹\ 2,80,000}=3.2:1$
- Quick Ratio $=\frac{\text{Liquid Assets}}{\text{Current Liabilities}}$
= ₹ 8,96,000 - ₹ 4,10,000 - ₹ 18,000 - ₹ 20,000
= ₹ 4,48,000
Quick Ratio $=\frac{₹\ 4,48,000}{₹\ 2,80,000}=1.6:1$
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