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    Question

    Read the following information to answer the below questions:   Net Sales = 40,00,000 (20 % GP Element) out of which 40% is on credit. Opening Inventories were 60 % of closing inventories. Opening Receivables are 120,000.  

    Calculate the Current ratio based on above

    information?
    A 2.32 Correct Answer Incorrect Answer
    B 2.45 Correct Answer Incorrect Answer
    C 2.24 Correct Answer Incorrect Answer
    D 1.48 Correct Answer Incorrect Answer

    Solution

    Current Ratio = Current Assets/Current Liabilities 7,84,000 / 3,50,000 =2.24 Current Assets = Stock + Debtors + Cash = 420,000+340,000+24000 = 7,84,000 Current Liability = Trade Creditors + Bank Overdraft + Short term borrowings = 200,000+1,20,000+30,000 =3,50,000

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