Read the information carefully and answer the given questions, Particulars, Amount (Rs.), Inventories, 50,000, Trade Receivables, 50,000, Advance Tax, 4,000, Cash and Cash Equivalents, 30,000, Trade Payables, 1,00,000, Bank overdraft, 4,000 Current Ratio of the firm is: Option 1: 2:1 Option 2: 1:1 Option 3: 1.5:1 Option 4: 1.29:1

Answer: 1.29:1. Solution: Current Ratio = (Current Assets)/(Current Liabilities) Calculation of Current Assets:, Particulars, Amount (Rs.), Inventories, 50,000, Trade Receivables, 50,000, Advance Tax, 4,000, Cash and Cash Equivalents, 30,000, Total Current Assets, 1,34,000, Calculation of Current Liabilities:, Particulars, Amount (Rs.), Trade Payables, 1,00,000, Bank Overdraft, 4,000, Total Current Liabilities, 1,04,000, Current Ratio Calculation: Current Ratio = (1,34,000)/(1,04,000) = 1.29 (approximately) Therefore, Current Ratio = 1.29:1 Note: Bank overdraft is a current liability because it is repayable on demand. Advance tax is a current asset as it represents a prepaid expense/advance payment to the government.

Financial Statements

Ratios

Easy

Read the information carefully and answer the given questions

Particulars	Amount (Rs.)
Inventories	50,000
Trade Receivables	50,000
Advance Tax	4,000
Cash and Cash Equivalents	30,000
Trade Payables	1,00,000
Bank overdraft	4,000

Current Ratio of the firm is:

2:1

1:1

1.5:1

1.29:1

✅ Correct Option: 4

Current Ratio = $\frac{\text{Current Assets}}{\text{Current Liabilities}}$

Calculation of Current Assets:

Particulars	Amount (Rs.)
Inventories	50,000
Trade Receivables	50,000
Advance Tax	4,000
Cash and Cash Equivalents	30,000
Total Current Assets	1,34,000

Calculation of Current Liabilities:

Particulars	Amount (Rs.)
Trade Payables	1,00,000
Bank Overdraft	4,000
Total Current Liabilities	1,04,000

Current Ratio Calculation:

Current Ratio = $\frac{1,34,000}{1,04,000}$ = $1.29$ (approximately)

Therefore, Current Ratio = 1.29:1

Note: Bank overdraft is a current liability because it is repayable on demand. Advance tax is a current asset as it represents a prepaid expense/advance payment to the government.

2025: 14 May Shift 2

EPS ( Earning per share)-

2025: 30 May Shift 2

Match List-I with List-II

List-I	List-II
(A). Liquidity Ratio	(I). Receivable Turnover Ratio
(B). Solvency Ratio	(II). Quick Ratio
(C). Activity (or Turnover) Ratio	(III). Earning Per Share Ratio
(D). Profitability Ratio	(IV). Debt to Equity Ratio

Choose the correct answer from the options given below:

2022: 8 Aug Shift 2

When the ratio is low, the firm is said to have favourable indication.

2026: 6 June Shift 1

A trading firm's average inventory is Rs. 40,000. If the inventory turnover ratio is 6 times and the firm sells goods at a gross profit of 25% on sales, ascertain the gross profit of the firm.

2023: 28 May Shift 1

Aradya Ltd. had debt equity ratio of 2.5 : 1. State which of the following transaction will not effect the Debt Equity Ratio :

2025: 15 May Shift 1

Match List-I with List-II

List-I	List-II
Accounting ratio	Type of accounting ratio
(A) Current ratio	(I) Liquidity ratios
(B) Stock turnover ratio	(II) Activity ratios
(C) Debt Equity ratio	(III) Solvency ratios
(D) Operating ratio	(IV) Profitability ratios

Choose the correct answer from the options given below:

Current Ratio of the firm is:

Solution

Related questions:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)