Loading [MathJax]/jax/output/HTML-CSS/jax.js
Home / Aptitude Tests / Commerce / \(\begin{array}{c|c}...

\(\begin{array}{c|c}
N & N \\
\hline
...

NNCapital 8000Plant and machinery5000Net profit 4000Motor Van 4500Drawings 200Stock 2000Creditors 2000Debtors 1000Accurals 300Banks 100Cash 6001410014100

What is the current ratio?

A.

1 : 4

B.

5 : 1

C.

3 : 1

D.

2 : 1

Correct answer is A

Using the Balance Sheet, the current ratio is calculated by dividing current assets by current liabilities: 

Current assets = stock + debtors + banks + cash 
current liabilities = drawings + creditors + accruals 

current assets = 2000 + 1000 + 100 + 600 =3700
current liabilities = 2000 + 200 + 300 = 2500
3700 ÷ 2500 = 1.4