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Accounting Ratios — Accountancy STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceAccountancyAccounting Ratios3 Marks
Question
Capital Employed ₹ 10,00,000; Fixed Assets ₹ 7,00,000; Current Liabilities ₹ 1,00,000. There are no Long-term Investments. Calculate Current Ratio.
[Hint: Current Assets = Capital Employed + Current Liabilities - Fixed Assets.]
✓

Answer

Capital Employed = 10,00,000
Fixed Assets = 7,00,000
Current Assets = Capital Employed + Current Liabilities - Fixed Assets
= 10,00,000 + 1,00,000 - 7,00,000 = 4,00,000
$\text{Current Ratio}=\frac{\text{Current Assets}}{\text{Current Liabilities}}$
$=\frac{4,00,000}{1,00,000}=4:1$

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