CA Inter P6 · Chapter 3 · Question 1 of 9
Vardhan Ltd has current liabilities of ₹ 4,00,000, a current ratio of 2.5 : 1 and a quick ratio of 1.5 : 1. Inventory is the only current asset excluded from quick assets. The value of inventory is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹ 4,00,000
Explanation
Current assets = 2.5 x ₹ 4,00,000 = ₹ 10,00,000. Quick assets = 1.5 x ₹ 4,00,000 = ₹ 6,00,000. Inventory = current assets - quick assets = ₹ 10,00,000 - ₹ 6,00,000 = ₹ 4,00,000. The figures ₹ 10,00,000 and ₹ 6,00,000 are total current assets and quick assets, not inventory.
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