Question
The current ratio of a company is 1.5 times. Calculate
the cash from the following information: Current liabilities = Rs.50,000 Inventory = Rs.25,000 Receivables = Rs.35,000 Prepaid expenses = Rs.5,000Solution
Current Ratio = Current assets/current liabilities Thus, current assets = current ratio * current liabilities = 1.5 * Rs.50,000 = Rs.75,000 Current assets = inventory + receivables + prepaid expenses + cash Thus, Rs.75,000 = Rs.25,000 + Rs.35,000 + Rs.5,000 + cash Cash = Rs.10,000
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