Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories

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Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories 50,000 Trade Receivables 50,000 Advance Tax 4,000 Cash and Cash Equivalents 30,000 Trade Payables 1,00,000 Bank overdraft 4,000 Question: Current Ratio of the firm is:

Accepted Answer

The formula for Current Ratio is: Current Ratio = Current Assets/Current Liabilities Step 1: Calculate Total Current Assets Current Assets = Inventories + Trade Receivables + Advance Tax + Cash \& Cash Equivalents Current Assets = 50,000 + 50,000 + 4,000 + 30,000 = Rs. 1,34,000 Step 2: Calculate Total Current Liabilities Current Liabilities = Trade Payables + Bank Overdraft Current Liabilities = 1,00,000 + 4,000 = Rs. 1,04,000 Step 3: Calculate Ratio Current Ratio = 1,34,000/1,04,000 ≈ 1.288:1 1

Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories $50, 000$ Trade Receivables $50, 000$ Advance Tax $4, 000$ Cash and Cash Equivalents $30, 000$ Trade Payables $1, 00, 000$ Bank overdraft $4, 000$ Question: Current Ratio of the firm is:

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Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories50,000 Trade Receivables50,000 Advance Tax4,000 Cash and Cash Equivalents30,000 Trade Payables1,00,000 Bank overdraft4,000 Question: Current Ratio of the firm is: