Question
Calculate the current ratio based on above information?
Refer to the following information to answer the next 4 questions (Q1 to Q4)Solution
Current Ratio = Current assets/current liabilities  Current assets = stock + debtors + investments (short term) + cash in hand                        = 12,000 + 12,000 + 4000 + 12,000                        = 40,000  Current liabilities = creditors + bank overdraft + provision for taxation                        = 16,000 + 4000 + 4000 + 4000                        = 28,000  Current Ratio = 40,000/28,000                        = 1.43
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