A Company’s Liquid Assets are Rs 2,00,000, Inventory is Rs 1,00,000, Prepaid Expenses are Rs 20,000 and Working Capital is Rs 2,40,000. Its Current Ratio will be:
1.33 : 1
Incorrect AnswerExplanation:
Liquid Assets are Rs 2,00,000, Inventory is Rs 1,00,000, Prepaid Expenses are Rs 20,000 and Working Capital is Rs 2,40,000.
current assets= liquid assets+ inventory+ prepaid expenses
=Rs 2,00,000 + Rs 1,00,000 + Rs 20,000
= Rs.3,20,000
working capital = current assets- current liabilities
Rs 2,40,000.= Rs. 3,20,0000- current liabilities
current liabilities= Rs.3,20,000-Rs. 2,40,000
current liabilities =RS.80,000
CURRENT RATIO = CURRENT ASSET/ CURRENT LIABILITIES
= Rs.3,20,000/ Rs. 80,000
= 4:1(answer)
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By: Abhipedia