Question

Find out current ratio from the following: 
Bank Overdraft ₹ 2,00,000,       Cash ₹ 1,50,000,        Outstanding expenses ₹ 1,00,000,       Stock ₹ 1,50,000

Hint:

Current Ratio = Current Assets ÷ Current Liabilities. Remember: Current Assets include cash, stock, debtors, etc. Current liabilities include bank overdraft, outstanding expenses, creditors, etc.

Answer 1

Step 1: Identify Current Assets and Current Liabilities
Current Assets include:

• Cash = ₹ 1,50,000
• Stock = ₹ 1,50,000

Current Liabilities include:

• Bank Overdraft = ₹ 2,00,000
• Outstanding expenses = ₹ 1,00,000

Step 2: Calculate Total Current Assets and Total Current Liabilities
\[ \text{Total Current Assets} = 1,50,000 + 1,50,000 = ₹ 3,00,000 \] \[ \text{Total Current Liabilities} = 2,00,000 + 1,00,000 = ₹ 3,00,000 \]
Step 3: Apply Current Ratio Formula
\[ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} = \frac{3,00,000}{3,00,000} = 1 \] Thus, the Current Ratio is 1:1.