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    Question

    If a company’s current assets are ₹3,00,000 and

    current liabilities are ₹2,00,000, what will be the Current Ratio?
    A 1.2 Correct Answer Incorrect Answer
    B 1.3 Correct Answer Incorrect Answer
    C 1.5 Correct Answer Incorrect Answer
    D 1.7 Correct Answer Incorrect Answer
    E 2.0 Correct Answer Incorrect Answer

    Solution

    The Current Ratio = Current Assets ÷ Current Liabilities = 3,00,000 ÷ 2,00,000 = 1.5.  This ratio measures a firm’s short-term liquidity. A ratio of 1.5 means the company has ₹1.50 in liquid assets for every ₹1 of short-term debt. While healthy, excessively high ratios can suggest idle working capital. Analysts often compare it with the Quick Ratio to check reliance on inventory.

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