Current ratio of a firm is 2:1. If a payment of Rs. 50,000 is made to sundry creditors, the current…

When the initial current ratio is greater than 1:1 (here 2:1, for example current assets of Rs. 2,00,000 and current liabilities of Rs. 1,00,000), paying Rs. 50,000 to sundry creditors reduces both current assets and current liabilities by the same amount, raising the ratio to $\frac{1,50,000}{50,000} = 3:1$. Therefore, the current ratio will "Increase".