The current ratio is 2:1. The impact of goods purchased on credit will: |
Increase the ratio Decrease the ratio No change in ratio Incomplete information |
Decrease the ratio |
The correct answer is option 2- Decrease the ratio. Current ratio = 2:1 New current asset = 2,00,000 + 20,000 New current liability = 1,00,000 + 20,000 New ratio = 2,20,000/1,20,000 Thus, current ratio decreases. |