Question

The current ratio of Jack Ltd. is 3.2 : 1 and the quick ratio is 1.5 : 1.
The excess of current assets over quick assets was represented by inventories which were Rs. 68,000.
Calculate:

[(i)] Current Assets
[(ii)] Quick Assets
[(iii)] Current Liabilities

Hint:

Current Assets = Quick Assets + Inventory. Ratios are always applied using assumed base 'x' (usually liabilities).

Answer 1

Let current liabilities be Rs. \( x \).
Then, according to the current ratio:
\[ \text{Current Assets} = 3.2x \]
And from the quick ratio:  
\[ \text{Quick Assets} = 1.5x \]
We are given:
\[ \text{Current Assets} - \text{Quick Assets} = \text{Inventories} \]
\[ 3.2x - 1.5x = 1.7x = 68,000 \]
\[ x = \frac{68,000}{1.7} = 40,000 \]
Now we calculate each required value: 

(i) Current Assets:
\[ 3.2x = 3.2 \times 40,000 = \text{Rs. } 1,28,000 \]
(ii) Quick Assets:
\[ 1.5x = 1.5 \times 40,000 = \text{Rs. } 60,000 \]
(iii) Current Liabilities:
\[ x = \text{Rs. } 40,000 \]

Final Answer:
\[ \boxed{ \begin{aligned} &\text{(i) Current Assets} = \text{Rs. } 1,28,000 \\ &\text{(ii) Quick Assets} = \text{Rs. } 60,000 \\ &\text{(iii) Current Liabilities} = \text{Rs. } 40,000 \end{aligned} } \]