Question

Formula for current ratio is .

• A. Current liabilities/current assets
• B. Current assets/current liabilities
• C. Fixed asset/ fixed liabilities
• D. Fixed liabilities/fixed assets

Answer 1

The correct option is B Current assets/current liabilities

Current ratio = Current Assets/Current liabilities

= [Inventories + Sundry Debtors + Cash and Bank balances + Receivables +

Loans and advances + Disposable Investments etc] /

[Creditors + Short term loans + Bank Overdraft + Cash credit+

Outstanding Expenses+ Provisions etc}