Calculate the current ratio if working capital is ₹45,000, total debt = ₹1,00,000, and long-term debt = ₹70,000.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 2.5:1.
Current liabilities = total debt - long-term debt
= 1,00,000 - 70,000
= ₹30,000
Current assets = working capital + current liabilities
= 45,000 + 30,000
= ₹75,000
Current ratio = current asset/current liabilities
= 75,000/30,000
= 2.5:1