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 ...
Question 1 Report
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
Answer Details
To find the current ratio, we need to divide the total current assets by the total current liabilities.
Total current assets = Stock + Debtor + Cash = ₦2,000 + ₦10,000 + ₦10,000 = ₦22,000
Total current liabilities = Creditors = ₦20,000
Current ratio = Total current assets / Total current liabilities = ₦22,000 / ₦20,000 = 1.1 : 1
Therefore, the current ratio is 1 : 1.
Note: The current ratio of 2:1 is generally considered a healthy ratio for a business. However, it varies based on industry standards and specific business requirements.
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