Use the following to answer the given question, \(\begin{array}{c|c} & ₦ \\ \hline Premises &...

WAEC 2007

Use the following to answer the given question,
\(\begin{array}{c|c} & ₦ \\ \hline Premises & 100,000 \\ Plant & 50,000\\ Fixtures & 30,000\\ Stock & 2,000 \\ Debtor & 10,000\\ Cash & 10,000\\ Creditors & 20,000 \end{array}\)
Current ratio is

A. 4 : 1
B. 3 : 1
C. 2 : 1
D. 1 : 1

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Correct Answer: Option D

Explanation

Current ratio is calculated by dividing your current assets by your current liabilities.

current assets = stock + debtors + cash
2,000 + 10,000 + 10,000 = 22,000

\(\frac{22,000}{20,000}\) = 1.1

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