Working capital of a company is Rs. 6,00,000 current ratio is 2.5 : 1, liquid ratio = 1.5 : 1. What is…
Given Working Capital (CA - CL) = Rs. 6,00,000 and Current Ratio (CA : CL) = 2.5 : 1, we have 2.5 CL - 1.0 CL = 1.5 CL = Rs. 6,00,000, so Current Liabilities (CL) = Rs.…
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Working capital of a company is Rs. 6,00,000 current ratio is 2.5 : 1, liquid ratio = 1.5 : 1. What is the value of inventory?
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Correct answer C
Given Working Capital (CA - CL) = Rs. 6,00,000 and Current Ratio (CA : CL) = 2.5 : 1, we have 2.5 CL - 1.0 CL = 1.5 CL = Rs. 6,00,000, so Current Liabilities (CL) = Rs. 4,00,000. Since Liquid Ratio = 1.5 : 1, Inventory = (Current Ratio - Liquid Ratio) * CL = (2.5 - 1.5) * Rs. 4,00,000 = Rs. 4,00,000.
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UGC NET Commerce