BALANCE SHEET AS AT 31st DECEMBER, 2010 \(\begin{array}{c...
BALANCE SHEET AS AT 31st DECEMBER, 2010 ₦₦Capital40,000Freehold premises50,000Less: Net loss5,00035,000Stock3,000Less: Drawings2,00033,000Debtors4,000Long term loan20,00053,000Cash at bank6,500Creditors8,000Accrued expenses4,00065,000Cash in hand1,500Total 65,000
Working capital ratio is
5 : 4
5 : 3
4 : 5
1 : 2
Correct answer is D
The working capital ratio is calculated simply by dividing total current assets by total current liabilities.
Current assets = 3000 + 4000 +6500 + 1500 = 15000
Current liabilities = 8000 + 4000 = 12000
15000/12000 = 1.25
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