Question

The current ratio of the firm is 2:1 and the quick ratio
1.33:1. The current liabilities were estimated at Rs.
2,50,000. The Firm received cash from sundry debtors
worth Rs. 100,000. What will be the new current ratio.
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Answer 1

Answer:

There will be no change in current ratio

Explanation:

See if CR = CA /CL

Therefore CA = 5,00,000

For eg

In CA

Sundry Debtors= 4,00,000

and Cash = 1,00,000

so when cash is paid

Sundry Debtors = 3,00,000

and Cash = 2,00,000

But since there is just internal trf from one acc to another there will be no impact on CA( in both cases CA = 5,00,000) and hence Current ratio would not change