Why Ltd has furnished following information regarding its current Assets and Current Liabilities:

Calculate Current Ratio and Liquid Ratio of the company.

Explanation

(i) Current Ratio =`("Current Assets")/("Current Liabilities") =(Rs 108000)/(Rs 54000)=2:1`
(ii) Liquid Ratio =`("Liquid Assets")/("Current Liabilities") = (Rs 54000)/(Rs 54000)=1:1`
Liquid Assets =Total current Assets -Inventories
=Rs 108000-Rs 54000=Rs 54000