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Current ratio = 2.5
Explanation:
Given:
Debtor = 150,000
Stock = 50,000
Bills receivable = 40,000
Prepaid expense = 10,000
Creditor = 60,000
Bills payable = 40,000
Computation of current assets:
Current assets = Debtor + Stock + Bills receivable + Prepaid expense
Current assets = 150,000 + 50,000 + 40,000 + 10,000
Current assets = 250,000
Computation of current liability:
Current liability = Creditor + Bills payable
Current liability = 60,000 + 40,000
Current liability = 100,000
Computation of Current ratio:
Current ratio = Current assets / Current liability
Current ratio = 250,000 / 100,000
Current ratio = 2.5
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