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A company has current assets of Rs.1,20,000 and current liabilities of Rs.30,000. What is its current ratio?

easy MCQ 1 mark Class 12 · Accountancy · Accounting Ratios
  1. 3
  2. 4
  3. 5
  4. 6
Answer
4

The correct answer is 4 — Hence the current ratio is 4.

Step-by-step solution

  1. Identify the formula for current ratio: Current Ratio = Current Assets ÷ Current Liabilities.
  2. Substitute the given values: Current Ratio = 1,20,000 ÷ 30,000.
  3. Perform the division: 1,20,000 ÷ 30,000 = 4.
  4. Hence the current ratio is 4.
Common mistake: Dividing current liabilities by current assets instead of the reverse

Concept tested: Current Ratio (Liquidity Ratio)

Published · How this solution was prepared and checked

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