A company had Current Assets of 300000 and Current Liabilities of 1,40000. Afterwards it purchases goods for 20000 on credit. Calculate current Ratio after the purchase

Explanation

Current Ratio = `("Current Assets")/("Current Liabilities")`
`=(Rs 300000+Rs 20000^(*))/(Rs 140000+Rs 20000^(*))=(Rs 320000)/(Rs 160000)=2:1`
Purchases of goods of Rs 20000 on credit results in ot increase in stock (i.e Current assets) and creditors(i.e current liabilities )both by" Rs 20000 each.