Current ratio and quick ratio
- Calculation current ratio from the following information:
| Particulars | ₹ | Particulars | ₹ |
| Total assets
Fixed tangibles assets Shareholder’s funds |
20,00,000
10,00,000 12,80,000 |
Non-current liabilities
Non-current Investments |
5,20,000
6,00,000 |
Solution:-
Current assets = total assets – fixed tangible assets – noncurrent investment
=200000 – 100000 – 60000
= 40000
Calculation of current liabilities
Current liabilities = total assets – share holder’s fund – noncurrent liabilities
= 200000 – 1280000 – 520000
= 200000
Calculation of current ratio = current assets / Current liabilities
Current ratio = 4,00,000 / 2,00,000
= 2:1
- Calculate Current Ratio from the following information:
| Particulars | ₹ | Particulars | ₹ |
| Equity Share Capital
Inventories Trade Receivables Advance Tax |
8,00,000
1,00,000 1,20,000 24,000 |
Cash & Cash Equivalents
Trade Payables Sort-term Borrowings (Bank Overdraft) 10% Investments |
56,000
60,000 40,000
80,000 |
Solution-
Current ratio= current assets / Current liabilities
Current assets = trade receivable + inventories+ advance tax+ cash and cash equivalent
= 1,20,000 + 100,000 + 24000 + 56000
= 300,000
Current liabilities = trade payable+ short term borrowing
= 60,000+40,000
= 100,000
Current Ratio = 3 : 1.
- Current Assets are Rs.7,50,000 and Working Capital is Rs.2,50,000 Calculation Current Ratio.
Solution –
Current ratio= current assets / Current liabilities
Working Capital = Current Assets – Current Liabilities
Current Liability = Current Assets – Working Capital
= 7,50,000 – 2,50,000
= 5,00,000
Current ratio = Current assets / Current liabilities
= 7,50,000 / 5,00,000
= 1.5
- A company had current Assets of 4,50,000 and current liabilities of 2,00,000. Afterwards it purchased goods for 30,000 on credit. Calculate current Ratio after the purchase.
Solution:
Calculation of Current Assets & Current Liabilities After Purchase
Current Assets After purchase = Current Assets + Stock
= 4,50,000 + 30,000
= 4,80,000
Current liabilities After purchase = Current liabilities + Creditors
= 2,00,000 + 30,000
= 2,30,000
Calculation of Current Ratio After purchase = current assets after purchase / current liabilities after purchase
= 7,50,000 / 5,00,000
= 2.09:1
- Current liabilities of a company were 1,75,000 and its current Ratio was 2:1. It paid 30,000 to a creditor, calculate Ratio after payment.
Solution:
Calculation of current Assets before payment
Current liabilities = 1,75,000
Current Ratio = 2:1
Current ratio = current assets / current liabilities
2 = Current assets / 1,75,000
Current Assets = 1,75,000 x 2
= 3,50,000
Calculation of current Assets offer payment
Current Assets = 3,50,000 – 30,000 = 3,20,000
Current liabilities = 1,75,000 – 30,000 = 1,45,000
New current Ratio = 3,20,000
After payment 1,45,000
2.21:1
6. Current Ratio is 2.5, working capital is 1,50,000. Calculate the amount of current Assets and Current Liabilities.
Solution:
Current Ratio = 2.5
Current ration = Current assets / Current Liabilities
2.5 = Current assets / Current Liabilities
C.A. = 2.5 C.L ————————1
Working capital = Current Assets – current Liabilities
150000 = C.A – C.L.
C.A – C.L. = 1,50,000—————————-2
Putting Eq (1) into Eq (2)
1,50,000 = 2.5 C.L – C.L
1.5 C.L = 1,50,000
C.L = 1,50,000 / 1.5
Current liabilities = 1,00,000
Putting C.L value in Eq (1)
Current Assets = 2.5 x 1,00,000
= 2,50,000
7. Working capital 6,00,000, Total Debt 27,00,000, Non-Current Liabilities 24,00,000. Calculate Current Ratio.
Solution:
Calculation of Current Liabilities
Total Debt = Non-current liabilities + Current Liabilities
27,00,000 = 24,00,000 + Current Liabilities
Current Liabilities = 27,00,000 – 24,00,000
= 3,00,000
Calculate of current Assets
Working capital = Current Assets – Current Liabilities
6,00,000 = Current Assets – 3,00,000
Current Assets = 6,00,000 + 3,00,000
= 9,00,000
Calculation of Current Ratio
Current ration = current assets / Current liabilities
= 9,00,000 / 3,00,000
= 3:1
8. Working capital is 18,00,000; trade payables 1,80,000; and other current liabilities are 4,200,000. Calculate Current Ratio.
Solution:
Calculation of current liabilities
Current liabilities = Trade payable + other current liabilities
= 1,80,000 + 4,20,000
= 6,00,000
Calculation of current Assets
Working capital = Current Assets – Current Liabilities
1,80,000 = Current Assets – 6,00,000
Current Asses = 24,00,000
Calculation of Current Ratio
Current ration = current assets / Current liabilities
= 24,00,000 / 6,00,000
= 4:1
9. Working capital 9,00,000; total debts (Liabilities) 19,50,000; Long-term Debts 15,00,000. Calculate Current Ratio.
Solution:
Calculation of Current Liabilities
Total debts = Non-Current liabilities + Current liabilities
19,50,000 = 15,00,000 + Current liabilities
Current liabilities = 19,50,000 – 15,00,000
= 4,50,000
Calculation of Current Assets
Working capital = Current Assets – Current liabilities
9,00,000 = Current Assets – 4,50,000
Current assets = 9,00,000 + 4,50,000
= 13,50,000
Calculation of Current Ratio
Current ration = current assets / Current liabilities
= 13,50,000 / 4,50,000
= 3:1
10. Trade payables 50,000, Working capital 9,00,000, current liabilities 3,00,000. Calculate Current Ratio.
Solution:
Calculation of current Assets
Working capital = Current Assets – Current Liabilities
9,00,000 = Current Assets – 3,00,000
Current Assets = 9,00,000 + 3,00,000
= 12,00,000
Calculation of Current Ratio
Current ration = current assets / Current liabilities
= 12,00,000 / 3,00,000
= 4:1
