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JAMB Commerce 1998 Question 13

Question 13

Business Calculations

Use the information below to answer questions 13 and 14.
SONU Enterprises Balance Sheet as at 31/3/98
Capital ₦6000.00
Net Profit ₦2000.00
Drawings (₦137.50)
Creditors ₦1000.00
Accruals ₦187.50
Total ₦9050.00
Plant/Machinery ₦2300.00
Motor van ₦2000.00
Stock ₦1250.00
Debtors ₦480.00
Bank ₦3000.00
Cash ₦20.00
Total ₦9050.00
What is the current ratio?

  1. A.4:1
  2. B.4.5:1
  3. C.5:1
  4. D.25.5:1
Show the answer and explanation

Answer: A (4:1)

Explanation

Current assets = 1 250 + 480 + 3 000 + 20 = 4 750. Current liabilities = 1 000 + 187.50 = 1 187.50. 4 750 ÷ 1 187.50 = 4:1.