Question

Calculate Current Ratio & Quick Ratio from the following information .

Inventories : Rs. 50,000

Trade receivables : Rs. 50,000

Advance tax : Rs. 4,000

Cash and cash equivalents : Rs. 30,000

Trade payables : Rs. 1,00,000

Short-term borrowings (bank overdraft). : Rs. 4,000​

Answer 1

Answer:

Current ratio = current assets/current liabilities

Current assets = inventory + trade receivable + advance tax + cash and cash equivalents

= 50,000 + 50,000 + 4,000 + 30,000 = Rs.1,34,000

Current liabilities = Trade payable + short term borrowing

= 1,00,000 + 4,000 = Rs.1,04,000

Current Ratio = 1,34,000/1,04,000 = 1.288