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Capital Employed Rs. 10,00,000; Fixed Assets Rs. 7,00,000; Current Liabilities Rs. 1,00,000. There are no Long-term Investments. Calculate Current Ratio.

SOLUTION

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

Current ratio = Current Assets /  Current liabilities
= 4,00,000 / 1,00,000
= 4: 1


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