A company has current assets of Rs. 500,000 and current liabilities of Rs. 250,000. What is its current ratio?
Correct answer: D. 2:1
- A. 0.5:1
- B. 1:1
- C. 2.5:1
- D. 2:1
Explanation
The current ratio is calculated as current assets divided by current liabilities. Thus, Rs. 500,000 divided by Rs. 250,000 gives 2:1, indicating two rupees of current assets for each rupee of current liabilities.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
What is the present value of Rs. 1,100 receivable after one year when the annual discount rate is 10%?
A project requires an initial investment of Rs. 1,000,000 and generates Rs. 600,000 at the end of each of the next two years. If the discount rate is 10%, what is the approximate net present value?
Working capital is commonly measured as:
Which of the following is an internal source of business finance?