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Question
Calculate the current ratio from the following information.
| Particulars | ₹ | Particulars | ₹ |
| Current investments | 40,000 | Fixed assets | 5,00,000 |
| Inventories | 2,00,000 | Trade creditors | 80,000 |
| Trade debtors | 1,20,000 | Bills Payable | 50,000 |
| Bills receivable | 80,000 | Expenses payable | 20,000 |
| Cash and cash equivalents | 10,000 | Non-Current liability | 3,00,000 |
Solution
Current ratio = `"Current Assets"/"Current liabilities"`
Current Assets = Current Investments + Inventories + Trade Debtors + Bills receivable + Cash & Cash equivalents
= 40,000 + 2,00,000 + 1,20,000 + 80,000 + 10,000
= Rs. 4,50,000
Current Liabilities
= Trade Creditors + Bills payable + Expenses Payable.
= 80,000 + 50,000 + 20,000
= Rs. 1,50,000
Current ratio =`450000/150000 = 45/15 = 3/1`
Current ratio = 3 : 1
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