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    Question

    Read the following information to answer the below

    questions: Net Sales = 40,00,000 (20 % GP Element) out of which 40% is on credit. Opening Inventories were 60 % of closing inventories. Opening Receivables are 120,000. Calculate Cash ratio of the company?
    A 1.40 Correct Answer Incorrect Answer
    B 0.09 Correct Answer Incorrect Answer
    C 0.07 Correct Answer Incorrect Answer
    D 1.04 Correct Answer Incorrect Answer

    Solution

    Cash Ratio = Cash & Cash Equivalents / Current Liabilities 24,000/ 3,50,000 0.07 Cash & Cash Equivalents= cash balance i.e., 24000 Current Liability = Trade Creditors + Bank Overdraft + Short term borrowings = 200,000+1,20,000+30,000 =3,50,000

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