Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

What will be the Current ratio if Working Capital is ₹720000, Trade Payables ₹40000, and Other Current Liabilities are ₹200000?

Options:

1:1

2:1

4:1

3:2

Correct Answer:

4:1

Explanation:

Total current liabilities= 200000+40000 = ₹240000
Current assets= Working capital + Current liabilities
                     = 720000+240000
                     = ₹960000 
Current ratio= Current assets/ Current liabilities
                   = 960000/240000
                   = 4:1