Read the information carefully and answer the questions.
| Particulars | Amount (₹) |
| 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:
Answer & explanation
Correct answer: option 4
The correct answer is option 4- 1.29:1.
Current assets = Trade Receivables + Cash and Cash Equivalents + Inventories + Advance Tax
= 50,000 + 30,000 + 50,000 + 4,000
= 1,34,000
Current liabilities = Trade Payables + Bank overdraft
= 1,00,000 + 4,000
= 1,04,000
Current ratio = Current assets/Current liabilities
= 1,34,000/1,04,000
= 1.288 :1 or 1.29:1