When Cash is ₹10,000, Stock is ₹25,000, B/R is ₹5,000, Creditors is ₹22,000 and Bank Overdraft is ₹8,000 then what will be the current ratio?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- 4:3.
Current Ratio = Current Assets / Current Liabilities
= 40,000 /30,000
= 4:3
Current asset = Cash + Stock + B/R
= ₹10,000 + 25,000 + 5,000
= ₹40,000
Current Liabilities = Creditors + Bank Overdraft
= 22,000 + 8,000
= ₹30,000