Question

Current Ratio is 3.5 : 1. Working Capital is Rs 90,000. Calculate the amount of Current Assets and Current Liabilities.

Answer 1

`"Current Ratio" = "Current Assets"/"Current Liablities"`

`3.5 = "Current assets"/"Current Liablities"`

or, Current Assets = 3.5 Current Liabilities   ...(1)

Working Capital = Current Assets ­− Current Liabilities

Working Capital = 90,000

or, Current Assets − Current Liabilities = 90,000

or, 3.5 Current Liabilities − Current Liabilities = 90,000 (from 1)

or, 2.5 Current Liabilities = 90,000

`"or.Current Liablities" = "90,000"/"2.5" = 36,000`

`"or.Current Assets" = 3.5 xx "Current Liablities"`

                                = `"3.5 "xx" 36,000"`

                                = `1,26,000`