O.M. Ltd has a Current Ratio of 3.5:1 and Quick Ratio of 2:1. If the excess of Current Assets over Quick Assets as represented by Stock is Rs 1,50,000, calculate Current Assets and Current Liabilities.

Solution

Current ratio= current assets/current liabilities=3.5
Current assets =3.5 current liabilities
Quick ratio= quick assets/ current liabilities=2
Quick assets= current assets- stock
(3.5 current liabilities-150000)/current liabilities=2
3.5 current liabilities-150000=2 current liabilities
3.5 Current liabilities-2 current liabilities = 150000
1.5 current liabilities= 150000
Current liabilities = 150000/1.5= 100000
Current assets=3.5*100000=350000

Some More Questions From Accounting Ratios Chapter

From the following Balance Sheets of Vijaya Ltd. as on 31-3-2009 and 31-3-2010 prepare a Cash Flow Statement.

Liabilities

31-3-2009

(Rs)

31-3-2010

(Rs)

Assets

31-3-2009

(Rs)

31-3-2010

(Rs)

Share Capital

General Reserve

Profit & loss account

Trade Creditors

45,000

15,000

10,000

8,700

65,000

27,500

15,000

11,000

Fixed Assets

Stock

Debtors

Cash

Preliminary expense

46,700

11,000

18,000

2,000

1,000

83,000

13,000

19,500

2,500

500

78,700

1,18,500

78,700

1,18,500

Additional Information:
(i) Depreciation on Fixed Assets for the year 2009-2010 was Rs. 14,700.
(ii) An interim dividend Rs. 7,000 has been paid to the shareholders during the year.

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Accounting Ratios

O.M. Ltd has a Current Ratio of 3.5:1 and Quick Ratio of 2:1. If the excess of Current Assets over Quick Assets as represented by Stock is Rs 1,50,000, calculate Current Assets and Current Liabilities.

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