Question : Cash Balance Rs.28,000; Trade Receivables Rs.47,000; Inventory Rs.45,000; Trade Payable Rs.34,000 and Bank Overdraft is Rs.6,000. What will be the Current Ratio?
Option 1: 3:1
Option 2: 2:1
Option 3: 4:1
Option 4: 5:1
Answer (1)
22nd Jan, 2024
Correct Answer: 3:1
Solution :
Current Asset = Cash + Trade Receivables + Inventory
Current Asset= 28000+47000+45000 = 120000
Current liability = Trade Payable + Bank Overdraft
Current liability = 34000+6000=40000
Current Ratio = Current Asset / Current Liability
Current Ratio = 120000/40000 = 3:1
Hence option 1 is the correct answer.
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