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Question
Inventory ₹ 3,00,000 (excluding loose tools ₹ 90,000); Trade Receivables ₹ 1,10,000; Trade Payables ₹ 1,80,000; Prepaid Expenses ₹ 40,000 and Goodwill is ₹ 45,000. Current Ratio will be ______.
Options
2.75 : 1
2.5 : 1
3 : 1
3.25 : 1
MCQ
Fill in the Blanks
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Solution
Inventory ₹ 3,00,000 (excluding loose tools ₹ 90,000); Trade Receivables ₹ 1,10,000; Trade Payables ₹ 1,80,000; Prepaid Expenses ₹ 40,000 and Goodwill is ₹ 45,000. Current Ratio will be 2.5 : 1.
Explanation:
Current Ratio = `"Current Assets"/"Current Liabilities"`
Current Assets = Inventory + Trade Receivables + Prepaid Expenses
= 3,00,000 + 1,10,000 + 40,000
= ₹ 4,50,000
Current Liabilities = Trade Payables = ₹ 1,80,000
Current Ratio = `(4,50,000)/(1,80,000)`
= 2.5 : 1
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