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JAMB Commerce 2003 Question 47

Question 47

Business Calculations

Use the information below to answer questions 46 and 47.
Balance Sheet as at 31st December, 2001
Liabilities (₦): Paid-up capital 200 000; Retained earnings 50 000; Creditors 50 000; Bills payable 50 000; Dividends payable 70 000; Total 420 000
Assets (₦): Building 50 000; Plant & Machinery 35 000; Fixtures 20 000; Debtors 50 000; Stocks 145 000; Bank 120 000; Total 420 000
Find the current ratio

  1. A.1.53:1
  2. B.1.85:1
  3. C.0.87:1
  4. D.0.50:1
Show the answer and explanation

Answer: B (1.85:1)

Explanation

Current assets = 50 000 + 145 000 + 120 000 = 315 000. Current liabilities = 50 000 + 50 000 + 70 000 = 170 000. 315 000 ÷ 170 000 ≈ 1.85:1.