Question

Calculate amount of current assets and current liablities if current ratio is 2.5 times and working capital is rs 60000

Answer 1

The solution is given below. Hope this will help you.

Explanation:

Given in the question:

current ration: 2.5

Working capital : 60000

Current Ration = Current assets \ current liabilities

2.5= Current Assets\ current liabilities

2.5 * current liabilities = current asset     (equation 1)

Working capital = Current asset - Current liability

60000 = Current asset - Current liability  (equation 2)

From equation 1 putting the value of current asset in equation 2

60000 = 2.5*current liabilities - current liabilities

60000 = 1.5 * current liabilities

Current liabilities = 40000

Putting the value of current liability in equation 1

2.5 * 40000 = current assets

Current Assets = 100000