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Question
Star Ltd. submits you the following information:
| Current Ratio | 2.4 : 1 |
| Quick Ratio | 1.6 : 1 |
| Working Capital | ₹ 2,80,000 |
Current Liabilities of the company will be:
Options
₹ 4,80,000
₹ 2,80,000
₹ 80,000
₹ 2,00,000
MCQ
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Solution
₹ 2,00,000
Explanation:
Working Capital = Current Assets − Current Liabilities
Current Ratio of the company is 2.4 : 1
Therefore, based on current ratio the working capital is 2.4 − 1 = 1.4
If Working Capital is 1.4,
Current Assets = 2.4
If Working Capital is 1,
Current Assets = `2.4/1.4`
If Working Capital is 2,80,000,
Current Asset = `2.4/1.4 xx 2,80,000`
= ₹ 4,80,000
Current Liabilities = Current Assets − Working Capital
= 4,80,000 − 2,80,000
= ₹ 2,00,000
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