Current liabilities of a company are Rs 6,00,000. Its current ratio is 3:1 and liquid ratio is 1:1. Calculate value of inventory ______________.

Rs 10,00,000

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Rs 8,00,000

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Rs 12,00,000

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Rs 11,00,000

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Solution

The correct option is C Rs 12,00,000
Quick ratio = Liquid assets (Current Assets - inventories)
------------------------------------------------------------------
Current Liabilities
1 = 18,00,000 (WN 1) - Inventories
-----------------------------------------------
6,00,0000
1 x 6,00,000 = 18,00,000 - Inventories
Inventories = 18,00,000 - 6,00,000
= 12,00,000.

Working note 1)
Current Ratio = Current Assets
-------------------------
Current liabilities
3 = Current Assets
-------------------------
6,00,000
Current Assets = 6,00,000 x 3
= 18,00,000

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