Calculate Current Ratio from the following information:
| Particulars | Amount (₹) |
| 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 |
Answer & explanation
Correct answer: option 1
The correct answer is option 1- 1.30:1.
Current assets = Trade Receivables + Cash and Cash Equivalents + Inventories + Advance Tax
= 60,000 + 50,000 + 60,000 + 4,000
= 1,74,000
Current liabilities = Trade Payables + Bank overdraft
= 1,30,000 + 4,000
= 1,34,000
Current ratio = Current assets/Current liabilities
= 1,74,000/1,34,000
= 1.298:1 or 1.30:1