Question

Current Ratio of a Company is 2.5 : 1. If its working capital is ₹ 60,000, its current liabilities will be ______.

Options

• ₹ 40,000

• ₹ 60,000

• ₹ 1,00,000

• ₹ 24,000

Answer 1

Current Ratio of a Company is 2.5 : 1. If its working capital is ₹ 60,000, its current liabilities will be ₹ 40,000.

Explanation:

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

2.5 = `"Current Assets"/"Current Liabilities"`

2.5 × Current Liabilities = Current Assets

Working Capital = ₹ 60,000

Let Current Liabilities be x.

Current Assets = `2.5x`

Working Capital = Current Assets − Current Liabilities

60,000 = `2.5x - x`

60,000 = `1.5x`

`(60,000)/(1.5)` = `x`

Current Liabilities (`x`) = 40,000