X Ltd. , has a current ratio of 3.5:1 and quick ratio of 2:1 If excess of current assets over quick assets represented by inventories is Rs. 24,000, calculate current assets and current liabilities.

Explanation

Current Ratio = 3.5:1
Quick Ratio = 2:1
Let Current liabilities = x
Current assets = 3.5x
and Quick assets = 2x
Inventories = Current assets - Quick assets
24,000 = 3.5x - 2x
24,000 = 1.5x
x = Rs. 16,000
Current Liabilities = Rs. 16,000
Current Assets = 3.5x = `3.5xx` Rs. 16,000 = Rs,56,000.
Current Ratio = Current assets : Current liabilities
= Rs. 56,000: Rs. 16,000
= 3.5:1
Quick Ratio = Quick assets : Current liabilities
= Rs. 32,000: Rs. 16,000
= 2:1