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Question

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


Solution

Current Ratio = 4.5 : 1

Quick Ratio = 3 : 1

Let current liabilities = x

Then current assets = 4.5x

And quick assets = 3x

Stock = Current Assets – Quick Assets

36,000 =  4.5x - 3x

36,000 = 1.5x

X =  36,0001.5=Rs.24,000 = Current Liabilities

Current Assets
= 4.5x
= 4.5 × Rs. 24,000
= Rs. 1,08,000

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