Calculate the Current Ratio from the following information.
|
Particulars |
(Rs.) |
|
Inventories |
50,000 |
|
Trade receivables |
50,000 |
|
Advance tax |
4,000 |
|
Cash and cash equivalent |
30,000 |
|
Trade payables |
1,00,000 |
|
Short-term borrowings (bank overdraft) |
4,000 |
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 1.29 : 1
Current ratio = Current assets ÷ Current liabilities. Advance tax is a current asset, and a bank overdraft is a short-term borrowing, so it is a current liability.
Current assets:
Inventories Rs. 50,000 + Trade receivables Rs. 50,000 + Advance tax Rs. 4,000 + Cash and cash equivalents Rs. 30,000
= Rs. 1,34,000
Current liabilities:
Trade payables Rs. 1,00,000 + Short-term borrowings Rs. 4,000
= Rs. 1,04,000
Current ratio:
Rs. 1,34,000 ÷ Rs. 1,04,000 = 1.29 : 1
NCERT (2026-27 edition):
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