ABC Ltd. is in the business of selling computers and computer accessories from Outlets located in Chandigarh. They had planned to open a fourth outlet but due to the lockdown, they decide to wait till the situation normalizes. Lockdown had hit the business badly and the main reason was that the company did not have an Online Selling Platform. The management of a company is hardcore selling professionals and did not have much knowledge of finance and accounting. As the business was in a downward trend, they wanted to assess their financial position so that they can plan in the light of fresh facts. They were particularly interested to know whether the company is in a position to meet its short-term financial commitments. A finance expert was engaged for this purpose. The accountant supplied the following information to the expert:

Calculate the current ratio of the company.

2.25:1

Current ratio = \(\frac{1080000}{480000}\)
                   = 2.25:1

Current Liabilities = Trade payables + Provision for tax + Other current liabilities + short-term borrowings 
                          =  200000 + 60000 + 120000 + 100000
                         = ₹480000

Current Assets = Inventories + cash + trade receivables + current investments + other current assets
                       = 340000 + 400000 + 220000 + 40000 + 80000
                       = ₹1080000