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    Question

    Refer to the following information to answer the next 4 questions (Q1 to Q4)

    Calculate the current ratio based on above information?

    A 1.00 Correct Answer Incorrect Answer
    B 1.29 Correct Answer Incorrect Answer
    C 1.43 Correct Answer Incorrect Answer
    D 1.50 Correct Answer Incorrect Answer
    E 1.67 Correct Answer Incorrect Answer

    Solution

    Current Ratio = Current assets/current liabilities   Current assets = stock + debtors + investments (short term) + cash in hand                         = 12,000 + 12,000 + 4000 + 12,000                         = 40,000   Current liabilities = creditors + bank overdraft + provision for taxation                         = 16,000 + 4000 + 4000 + 4000                         = 28,000   Current Ratio = 40,000/28,000                         = 1.43

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