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  5. Accounting Ratios

12th Class Accountancy Accounting Ratios Question Bank MCQs - Accounting Ratios

  • question_answer
    A Company's Liquid Assets are Rs. 2,00,000, Inventory is Rs. 1,00,000, Prepaid Expenses are Rs. 20,000 and Working Capital is Rs. 2,40,000. Its Current Ratio will be:

    A) 1.33 :1

    B) 4 : 1        

    C) 2.5 : 1

    D) 3 : 1

    Correct Answer: B

    Solution :

    [b] 4:1
    Hint: Working Capital = Current Assets - Current Liabilities
     2,40,000 = (2,00,000 +1,00,000 + 20,000) - CL
     CL=Rs. 80,000
    Current Ratio = \[\frac{Current Assets}{~Current Liabilities}\]
    =\[\frac{3,20,000}{~80,000}\]= 4:1


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