Question

Total Assets — Rs.3,00,000
Non-current Assets — Rs.2,60,000
Non-current Liabilities — Rs.80,000
Shareholders' Funds — Rs.2,00,000
Current ratio calculated on the basis of the above information will be:

• A. 0.5 : 1
• B. 2 : 1
• C. 1.5 : 1
• D. 1 : 1

Hint:

The current ratio indicates liquidity and is calculated by dividing current assets by current liabilities. A ratio of \( 2 : 1 \) is considered healthy.

Answer 1

The Correct Option is B

Step 1: Calculate Current Assets:
\[ {Current Assets = Total Assets - Non-current Assets} \] \[ {Current Assets = Rs.3,00,000 - Rs.2,60,000 = Rs.40,000}. \] Step 2: Calculate Current Liabilities:
The firm’s total liabilities are derived as: \[ {Total Liabilities = Total Assets - Shareholders' Funds}. \] \[ {Total Liabilities = Rs.3,00,000 - Rs.2,00,000 = Rs.1,00,000}. \] Out of this, the non-current liabilities are Rs.80,000. Hence: \[ {Current Liabilities = Rs.1,00,000 - Rs.80,000 = Rs.20,000}. \] Step 3: Calculate Current Ratio:
The current ratio is calculated as: \[ {Current Ratio = } \frac{ {Current Assets}}{ {Current Liabilities}}. \] Substitute the values: \[ {Current Ratio = } \frac{Rs.40,000}{Rs.20,000} = 2 : 1. \] Conclusion:
The current ratio calculated based on the given information is \( \mathbf{2 : 1} \).