Question

Current Ratio 2.5 , Quick ratio 1.5. working Capital 60,000. current Liabilities?​

Answer 1

Explanation:

Given,

Current ratio = 2.5 : 1

Quick Ratio = 1.5 : 1

Net working capital = 60,000

Net working capital = Current assets - Current liabilities

Current Assets = Net working capital + Current liabilities

= 60,000 + Current liabilities (1)

Current ratio = Current assets

-------------------------

Current liabilities

Current Assets = Current liabilities x 2.5 (2)

Merging equation (1) and (2)

60,000 + Current liabilities = 2.5Current liabilities

60,000 = 2.5 current liabilities - Current liabilities

60,000 = 1.5 Current liabilities

Current liabilities = 60,000

--------------

1.5

= 40,000

Therefore, current liabilities = 40,000.

Answer 2

Explanation:

• Current Ratio = 2.5
• Quick ratio = 1.5
• Working Capital = 60,000
• Current Liabilities = ??

Solution :

Current Ratio = Current Assets/Current Liabilities

Current Ratio = 2.5

Let,

• Current Liabilities = x
• Current Assets = 2.5x

Working Capital = 60,000

Working Capital = Current Assets - Current Liabilities

60,000 = 2.5x - x

60,000 = 1.5x

1.5x = 60,000

x = 60,000/1.5

x = 40,000

Current Liabilities = 40,000

Current Assets = 2.5x

2.5 × 40,000

1,00,000

Current Assets = 1,00,000

Current Ratio = 2.5

Current Ratio = Current Assets/Current Liabilities

1,00,000/40,000 = 2.5

Therefore, Current Liabilities = 40,000.