Current ratio is 2:1. Sale of inventories at profit for cash Current liabilities remain unchanged and the sale of inventory at profit makes current assets to be increased by the amount of profit. So, the current ratio improved. Lets assume Current assets is ₹200000 and current liabilities is ₹100000. Goods are sold for ₹50000 whereas book value is ₹40000 which means cash is increased by ₹50000 and stock is deducted by ₹40000. means overall current assets is increased by 10000. So new current assets is 210000 and current liabilities is of ₹100000. So current ratio is 2.1:1.
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