Question

Calculate Current Ratio:

Debtors = ₹ 90,000, Creditors = ₹ 30,000, Bills receivables = ₹ 10,000, Bills payable = ₹ 12,000, Stock of goods = ₹ 40,000, Short-term loan = ₹ 40,000, Outstanding expenses = ₹ 14,000, Cash balance = ₹ 70,000, Machinery = ₹ 1,00,000, Current investments = ₹ 25,000, Non-current investments = ₹ 25,000, Loose tools = ₹ 15,000, Bank overdraft = ₹ 29,000.

Answer 1

Current assets = Debtors + Bills receivable + Stock of goods + Cash balance + Current investments + Loose tools

= 90,000 + 10,000 + 40,000 + 70,000 + 25,000 + 15,000

= ₹ 2,50,000

Current liabilities = Creditors + Bills payable + Short-term loan + Outstanding expenses + Bank overdraft

= 30,000 + 12,000 + 40,000 + 14,000 + 29,000

= ₹ 1,25,000

Current ratio = \(\frac{Current\,assets}{Current\,liabilities}\)

= \(\frac{2,50,000}{1,25,000}\)

= 2 : 1

Note: Machinery and Non-current investment are to be committed as it is not to be included in current assets.