Question

From the following information, if ra 1000 is paid to creditors what will be the effect ( increase or decrease or no change ) on current ratio , if before payment , balances are : cash rs 15000 , creditors rs 7500

Answer 1

There will be no change in Current Ratio as Rs. 1000/- is reduced from Cash and Current Liabilities also gets reduced by Rs. 1000/-. So NO CHANGE in Current Ratio.