Financial Statements

Ratios

Easy

Financial Statements

The current ratio of a firm is 2:1 and quick ratio is 1:1. If liabilities are Rs1,00,000 then find the value of working capital.

Rs 3,00,000

Rs 2,00,000

Rs 1,00,000

Rs 50,000

✅ Correct Option: 3

Given information:

Current Ratio = 2:1
Quick Ratio = 1:1
Current Liabilities = Rs 1,00,000

Using the Current Ratio formula:

$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$

$\frac{2}{1} = \frac{\text{Current Assets}}{1,00,000}$

Current Assets = 2 × 1,00,000 = Rs 2,00,000

Calculating Working Capital:

$\text{Working Capital} = \text{Current Assets} - \text{Current Liabilities}$

Working Capital = 2,00,000 - 1,00,000 = Rs 1,00,000

The given Quick Ratio of 1:1 confirms this calculation. With Quick Assets equal to Current Liabilities (Rs 1,00,000), the difference between Current Assets (Rs 2,00,000) and Quick Assets (Rs 1,00,000) represents Inventory of Rs 1,00,000, which is a reasonable composition of current assets.

Answer: Rs 1,00,000 (Option 3)

2022: 20 July Shift 1

Make the right combination of the ratios that enables to find the short term liquidity.

(a) Return on Equity

(b) Acid Test Ratio

(d) Sacrificing Ratio

(e) Inventory Turnover Ratio

Choose the most appropriate answer from the options given below :

2026: 6 June Shift 1

Given the following information:

Revenue from Operations Rs. 3,40,000

Cost of Revenue from Operations Rs. 1,20,000

Selling expenses Rs. 80,000

Administrative Expenses Rs. 40,000

Calculate the operating ratio.

2026: 20 May Shift 1

The current ratio of a firm is 2 : 1. If the firm purchased goods on credit, then how will it affect its current ratio?

2026: 20 May Shift 1

From the following details, calculate interest coverage ratio: Net Profit after tax Rs. 1,20,000; 15% Long-term debt 20,00,000; and Tax rate 40%.

2026: 24 May Shift 1

X Ltd., has a current ratio of 2:1 and quick ratio of 1.5:1. If excess of current assets over quick assets represented by inventories is Rs. 24,000. Calculate current assets and current liabilities.

2022: 20 Aug Shift 2

Match List I with List II

List I	List II
A. Liquidity Ratio	I. Proprietary Ratio
B. Solvency Ratio	II. Current Ratio
C. Activity Ratio	III. Earning per Share
D. Profitability ratio	IV. Current assets turnover ratio

Choose the correct answer from the options given below:

The current ratio of a firm is 2:1 and quick ratio is 1:1. If liabilities are Rs1,00,000 then find the value of working capital.

Solution

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