Answer :
Answer:
In the given scenario, we have the following information:
Current ratio = 4:1
Liquid ratio = 1.2:1
Working Capital = ₹1,80,000
The current ratio is a comparison of current assets to current liabilities, indicating a 4:1 ratio. The liquid ratio, which is a stricter measure of liquidity, also known as the quick ratio, is 1.2:1. The working capital is provided as ₹1,80,000.
To find the values of Total Current Assets and Stock, we need to first calculate the values of Current Liabilities, Liquid Assets, and Liquid Liabilities.
Given the current ratio of 4:1, we can express the current assets as 4x and current liabilities as x, where x is a common multiplier.
From the current ratio,
Current Assets = 4x
Current Liabilities = x
Given the liquid ratio of 1.2:1, we can express the liquid assets as 1.2y and liquid liabilities as y, where y is a common multiplier.
From the liquid ratio,
Liquid Assets = 1.2y
Liquid Liabilities = y
Working Capital (WC) is calculated as:
WC = Current Assets - Current Liabilities
1,80,000 = 4x - x
1,80,000 = 3x
x = 60,000
Now that we have the value of x (Current Liabilities) as ₹60,000, we can calculate the Total Current Assets:
Total Current Assets = Current Assets + Stock
From the current ratio:
4x = 4 * 60,000 = ₹2,40,000
Next, we need to find the Stock value:
Total Current Assets = Current Assets + Stock
2,40,000 = 1.2y + 60,000 (since Liquid Assets = 1.2y)
1.2y = 2,40,000 - 60,000
1.2y = 1,80,000
y = 1,50,000
Therefore, the value of Total Current Assets is ₹2,40,000 and the value of Stock is ₹1,50,000.