Current liabilities of a company were ₹2,00,000 and its current ratio was 2.5 : 1. After this the company paid ₹1,00,000 to a trade payable. The current ratio after the payment will be:

4:1

The correct answer is option 2- 4:1.

Current Ratio= Current Current Assets/Current Liabilities
2.5/1= Current Assets/2,00,000
Current assets = 2,00,000 x 2.5
Current Assets = 5,00,000

After Payment of Trade Payable, Current Assets is reduced by ₹1,00,000 because cash is reduced. and Current Liabilities will be reduced by ₹1,00,000 as trade payables are reduced by this amount. 

Hence the new current assets = 5,00,000 - 1,00,000
                                           = ₹4,00,000

New Current Liabilities = 2,00,000 -1,00,000
                                 = 1,00,000

So, Current Ratio = 4,00,000/1,00,000
                          = 4:1