Question : ---------------------ratio explains the relationship between current assets and current liabilities of a business.
Option 1: Liquid ratio
Option 2: Current ratio
Option 3: Current assets ratio
Option 4: Current liabilities ratio
Correct Answer: Current ratio
Solution : Answer = Current ratio.
The current ratio measures the relationship between a company's current assets and current liabilities, providing insight into its short-term liquidity and ability to cover short-term obligations. A higher current ratio indicates a healthier financial position, while a lower ratio may signal potential liquidity challenges or inefficiencies in managing current assets and liabilities. Hence, the correct option is 2,
Question : Which of the following is the correct formula for "Current Ratio"?
Option 1: Liquid Assets/Current Liabilities
Option 2: Current Assets/Current Liabilities
Option 3: Fixed Assets/Current Assets
Option 4: Liquid Assets/Current Assets
Question : The Current Liabilities of a Company are Rs.7,00,000. Its current ratio is 3.5: 1 and its acid test ratio is 1.5: 1. The value of Current assets, Liquid assets and Inventories are
Option 1: Current assets 10,50,000. Liquid assets 6,12,500. Stock 4,37,500
Option 2: Current assets 10,50,000. Liquid assets 6,22,500, stock 4,27,500
Option 3: Current assets 6,22,500. Liquid assets Rs 10,50,000. Stock 4,27,500
Option 4: Current assets24,50,000, liquid assets 10,50,000. Stock 14,00,000
Question : Working capital is the difference between
Option 1: Total debt and long term debt
Option 2: Liquid assets and current liabilities
Option 3: Current assets and current liabilities
Option 4: Total assets and current liabilities
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