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Calculate 'Liquidity Ratio' form the fol...

Calculate 'Liquidity Ratio' form the following information:
`{:("Current liabilities",,=,Rs.50_(,)000,),("Current assets",,=,Rs.80_(,)000,),("Inventories",,=,Rs.20_(,)000,),("Advance tax",,=,Rs.5_(,)000,),("Prepaid expenses",,=,Rs.5_(,)000,):}`

Text Solution

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Liquidity Ratio `=("Liquid Assets")/("Current Liabilities")`
Liquidity Assets = Current assets - (Inventories + Prepaid expenses + Advance tax)
= Rs. 80,000 - (Rs. 20,000 + Rs. 5,000 + Rs. 5,000)
= Rs. 50,000
Liquidity Ratio `=(Rs.50,000)/(Rs.50,000)=1:1`
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