Question

Current Ratio of a Company is 2.4 : 1 and its Current Liabilities are ₹ 2,00,000. Subsequently, it sold goods costing ₹ 1,00,000 at a profit of 40%, half of which was on credit. Current ratio will be ______.

Options

• 3.1 : 1

• 2.4 : 1

• 2.6 : 1

• 2.5 : 1

Answer 1

Current Ratio of a Company is 2.4 : 1 and its Current Liabilities are ₹ 2,00,000. Subsequently, it sold goods costing ₹ 1,00,000 at a profit of 40%, half of which was on credit. Current ratio will be 2.6 : 1.

Explanation:

Current Assets = 2,00,000 × 2.4

= ₹ 4,80,000

After sale of goods costing ₹ 1,00,000 for ₹ 1,40,000

Current Assets = 4,80,000 + 40,000

= ₹ 5,20,000

Current Ratio = `"Current Assets"/"Current Liabilities"`

= `(5,20,000)/(2,00,000)`

= 2.6 : 1