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Question
What will be the Current Ratio from the following?
Liquid Assets ₹ 1,00,000; Inventory ₹ 90,000 (including loose tools ₹ 15,000); Prepaid Expenses ₹ 5,000; Working Capital ₹ 1,20,000.
Options
1.5 : 1
3.25 : 1
3 : 1
1.625 : 1
MCQ
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Solution
3 : 1
Explanation:
Current Assets = Liquid Assets + Inventory (excluding loose tools) + Prepaid Expenses
= 1,00,000 + 75,000 + 5,000
= ₹ 1,80,000
Current Liabilities = Current Assets − Working Capital
= 1,80,000 − 1,20,000
= ₹ 60,000
Current Ratio = `"Current Assets"/"Current Liabilities"`
= `(1,80,000)/(60,000)`
= 3 : 1
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