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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.
Solution
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`
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