A business has a current ratio of 3:1 and quick ratio of 1.2: 1. If working capital is ₹ 1,80,000, calculate total current assets and inventory.

Total Current Assets= Working Capital + Current Liabilities Working Capital = ₹$\displaystyle 1,80,000$ Working Capital= Current Assets- Current Liabilities Therefore, ₹$\displaystyle 1,80,000$= Current Assets- Current Liabilities Current Assets= $\displaystyle 1,80,000$ + Current Liabilities Current Ratio $\displaystyle 3$ : $\displaystyle 1$ Current Ratio = Current Assets/ Current Liabilities Therefore, $\displaystyle 3$= $\displaystyle 1,80,000$+ Current Liabilities $\displaystyle 1$ Current Liabilities $\displaystyle 3$ Current Liabilities= $\displaystyle 1,80,000$+ Current Liabilities Current liabilities= ₹$\displaystyle 90,000$ Current Assets= $\displaystyle 1,80,000$ + Current Liabilities Current Assets= $\displaystyle 1,80,000$ + $\displaystyle 90,000$ Current Assets= ₹$\displaystyle 2,70,000$ Quick Ratio= $\displaystyle 1.2$:$\displaystyle 1$ Quick Ratio= Quick Assets/ Current Liabilities $\displaystyle 1.2$/$\displaystyle 1$= Quick Assets/ $\displaystyle 90,000$ So, Quick Assets = $\displaystyle 1$·$\displaystyle 2$ × $\displaystyle 90,000$= ₹$\displaystyle 1,08,000$ Inventory = Current Assets- Quick Assets = $\displaystyle 2,70,000$ – $\displaystyle 1,08,000$ = ₹$\displaystyle 1,62,000$