Question

Working capital of King Ltd. is ₹ 2,00,000, and its Current Assets are ₹ 6,00,000. What is its Current Ratio?

Options

• 2 : 1

• 1 : 1

• 1.5 : 1

• 3 : 1

Answer 1

1.5 : 1

Explanation:

Calculation of Current Liabilities:

\[\text{Current Liabilities} = \text{Current Assets} - \text{Working Capital}\]

$$\text{Current Liabilities} = ₹ 6,00,000 - ₹ 2,00,000 = ₹ 4,00,000$$

Calculation of Current Ratio:

$$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} = \frac{6,00,000}{4,00,000} = 1.5$$

Thus, the ratio is 1.5 : 1.