Lesson eLearning

A start‑up company, FreshCo, reports current assets of Rs.2,00,000 and current liabilities of Rs.50,000. What is its current ratio? Express the answer to two decimal places.

easy 1 mark Class 12 · Accountancy · Accounting Ratios
Answer
4.00

The correct answer is 4.00 — Express to two decimal places: 4.00.

Step-by-step solution

  1. Identify current assets: Rs.2,00,000.
  2. Identify current liabilities: Rs.50,000.
  3. Apply the formula for current ratio: current assets ÷ current liabilities.
  4. Compute 2,00,000 ÷ 50,000 = 4.0.
  5. Express to two decimal places: 4.00.
Common mistake: Confusing ratio with percentage or rounding incorrectly

Concept tested: Liquidity ratio

Published · How this solution was prepared and checked

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