Question

Shine Limited has a current ratio 4.5:1 and quick ratio 3:1; if the inventory is 36,000, calculate current liabilities and current assets.

Answer 1

or,

or, 4.5 Current Liabilities = Current Assets

or,

or, 3 Current Liabilities = Quick Assets

$\mathrm{Quick}\mathrm{Assets}=\mathrm{Current}\mathrm{Assets}-\mathrm{Inventory}=\mathrm{Current}\mathrm{Assets}-36,000$

Current Assets − Quick Assets = 36,000

or, 4.5 Current Liabilities − 3 Current Liabilities = 36,000

or, 1.5 Current Liabilities = 36,000

or, Current Liabilities = 24,000

Current Assets = 4.5 Current Liabilities

Note: The solution given in the book is incorrect as it from the given figures Current Assets is ascertained to be Rs 1,08,000 and Current Liabilities Rs 24,000.