Current Assets of a Company were ₹1,00,000 and its current ratio was 2:1. After this the company paid  ₹25,000 of Trade Payable. The Current Ratio after the payment will be:

3:1

The correct answer is option 3- 3:1.

Current Ratio = Current Assets / Current Liabilities
Current Ratio = 2/1
1,00,000/Current Liabilities = 2/1
Current liabilities = 1,00,000/2
Current Liabilities = 50,000

After Payment of trade Payable,
Cash/Bank is reduced, so Current Assets = (1,00,000-25,000)
                                                                 = 75,000

Trade payable paid, so Current liabilities are also reduced = (50,000-25,000)
                                                                                            = 25,000

Therefore, New Current Ratio = 75,000/25,000
                                                  = 3:1