The current liabilities of Mohit Ltd are Rs. 150000 and its current ratio is 3:1 and liquid ratio is
1:1. Calculate the value of current assets, liquid assets and stock of Mohit ltd.
To calculate the value of current assets, liquid assets, and stock of Mohit Ltd, we first need to understand the formulas for the current ratio, liquid ratio, and their relationship with the different components of current assets.
The current ratio is calculated by dividing current assets by current liabilities, and the formula is:
Current Ratio = Current Assets / Current Liabilities
The liquid ratio, also known as the quick ratio, is calculated by subtracting the stock (inventory) from current assets and then dividing it by current liabilities, and the formula is:
Liquid Ratio = (Current Assets - Stock) / Current Liabilities
Given that the current ratio is 3:1, we can express it as:
3/1 = Current Assets / 150000
We can cross multiply this equation to find the value of current assets:
Current Assets = (3/1) * 150000
Current Assets = 450000
Next, given that the liquid ratio is 1:1, we can express it as:
1/1 = (Current Assets - Stock) / 150000
Again, we can cross multiply this equation to find the value of (Current Assets - Stock):
Current Assets - Stock = (1/1) * 150000
Current Assets - Stock = 150000
Now, subtracting Stock from both sides of the equation will give us the value of Stock:
Stock = Current Assets - (Current Assets - Stock)
Stock = Current Assets - Current Assets + Stock
Stock = 450000 - 150000
Stock = 300000
Hence, the value of the current assets of Mohit Ltd is Rs. 450000, the value of the stock is Rs. 300000, and the value of liquid assets (which is the same as current assets minus stock) is Rs. 150000.