Study the information given below carefully and answer the following question.
| Particulars | 2020 (Amount in ₹) |
2019 (Amount in ₹) |
2018 (Amount in ₹) |
| Outstanding Expenses | 50,000 | 40,000 | 25,000 |
| Prepaid Expenses | 3,00,000 | 2,50,000 | 3,50,000 |
| Trade Payables | 18,00,000 | 16,00,000 | 14,00,000 |
| Inventory | 12,00,000 | 10,00,000 | 11,00,000 |
| Trade Receivables | 11,00,000 | 8,00,000 | 10,00,000 |
| Cash In hand | 17,00,000 | 12,00,000 | 15,00,000 |
| Revenue from Operations | 24,00,000 | 18,00,000 | 20,00,000 |
| Gross Profit Ratio | 12% | 15% | 18% |
Current Ratio for the year 2020 will be_______________
Answer & explanation
Correct answer: option 3
The correct answer is option 3- 2.32:1.
Current Assets = Inventory + Trade Receivables + Cash In hand + Prepaid Expenses
= 3,00,000 + 12,00,000 + 11,00,000 + 17,00,000
= 43,00,000
Current Liabilities = Trade Payables + Outstanding Expenses
= 50,000 + 18,00,000
= 18,50,000
Current Ratio = Current assets/Current liabilities
= 43,00,000/18,50,000
= 2.32 :1