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Question
Calculate current ratio from the following information:
| ₹ | |
| Equity share capital | 8,00,000 |
| Inventories | 1,00,000 |
| Trade Receivables | 1,20,000 |
| Advance Tax | 24,000 |
| Cash and Cash equivalents | 56,000 |
| Trade Payables | 60,000 |
| Short term borrowings (Bank overdraft) | 40,000 |
| 10% Investments | 80,000 |
Numerical
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Solution
Current ratio = `"Current assets"/"Current liabilities"`
= `(3,00,000)/(1,00,000)`
= 3 : 1
Current Assets = Inventories + Trade Receivables + Advance tax + Cash and cash equivalents
= 1,00,000 + 1,20,000 + 24,000 + 56,000
= 3,00,000
Current Liabilities = Trade payables + Bank Overdraft
= 60,000 + 40,000
= 1,00,000
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