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
A. 4 : 1 B. 3 : 1 C. 2 : 1 D. 1 : 1
Correct Answer: D
Explanation
Current ratio is calculated by dividing your current assets by your current liabilities. current assets = stock + debtors + cash 2,000 + 10,000 + 10,000 = 22,000 \(\frac{22,000}{20,000}\) = 1.1
