Practical Problem 11
A Compay had the following Current Assets and Current Liabilities
Debtors | ₹ 1,20000 | Creditors | ₹ 60,000 |
Bills Payable | ₹ 40,000 | Stock | ₹ 60,000 |
Loose Tools | ₹ 20,000 | Bank overdraft | ₹ 20,000 |
Calculate Current Ratio.
SOLUTION:
(1) Current Assets = Debtors + Stock + Loose Tools
= 1,20,000 + 60,000 + 20,000
= ₹ 2,00,000
(2) Current liabilities = Creditors + Bills payable + Bank overdraft
= 60,000 + 40,000 + 20,000
= ₹ 1,20,000
(3) Current ratio = Current Assets ÷ Current Liabilities
∴ Current Ratio = 200000/120000
∴ Current Ratio =5/3
∴ Current Ratio = 5:3