Question

A firm had current assets of ₹ 7,20,000. It then purchased goods for ₹ 30,000 on credit. After this purchase, the current ratio was 3 : 1. Ascertain the amount of Current Liabilities and Working Capital after the purchase.

Answer 1

Current Ratio = `"Current Assets"/"Current Liabilities"`

Current Ratio after the purchase of goods on Credit of ₹ 30,000.

Let the Current Liabilities be ₹ x.

3 = `(₹ 7,20,000  + ₹ 30,000 ("stock"))/(x  + ₹ 30,000 ("creditors"))`

3 (x + ₹ 30,000) = ₹ 7,20,000 + ₹ 30,000

3x + ₹ 90,000 = ₹ 7,50,000

3x = ₹ 7,50,000 − ₹ 90,000

x = `(₹ 6,60,000)/3`

x (Current Liabilities) = ₹ 2,20,000 (Before Payment)

Current Liabilities = ₹ 2,20,000 + ₹ 30,000

= ₹ 2,50,000

Current Assets = ₹ 7,20,000 + ₹ 30,000

= ₹ 7,50,000

Working Capital = Current Assets − Current Liabilities

= ₹ 7,50,000 − ₹ 2,50,000

= ₹ 5,00,000