Question

Capital Employed ₹10,00,000; Fixed Assets ₹7,00,000; Current Liablities ₹1,00,000. There are no Long-term Investments. Calculate Current Ratio.

Answer 1

Capital Employed = 10,00,000

Fixed Assets = 7,00,000

Current Assets = Capital Employed + Current Liabilities − Fixed Assets

= 10,00,000 + 1,00,000 − 7,00,000 = 4,00,000

`"Current Ratio" = "Current Assets"/ "Current liability" = 400000/100000 = 4 : 1`