Calulate Current Ratio from the following information:
Particulars (Rs.) Amount (in Rs) Inventories 60,000 Trade receivables 60,000 Advance tax 4,000 Cash and cash equivalents 50,000 Trade payables 1,30,000 Bank Overdraft 4,000
Calulate Current Ratio from the following information:
| Particulars (Rs.) | Amount (in Rs) |
|---|---|
| Inventories | 60,000 |
| Trade receivables | 60,000 |
| Advance tax | 4,000 |
| Cash and cash equivalents | 50,000 |
| Trade payables | 1,30,000 |
| Bank Overdraft | 4,000 |
Solution
✅ Correct Option: 1
Current Ratio =
Identifying Current Assets:
Inventories + Trade receivables + Advance tax + Cash and cash equivalents
= 60,000 + 60,000 + 4,000 + 50,000 = 1,74,000
Identifying Current Liabilities:
Trade payables + Bank Overdraft
= 1,30,000 + 4,000 = 1,34,000
Note: Bank Overdraft is a current liability as it is repayable on demand.
Calculating Current Ratio:
Current Ratio = = 1.30:1
Answer: Option 1 (1.30:1)
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