Current Ratio of a Company is 2.4: 1 and its Current Liabilities are 22,00,000, Subsequently, it sold goods costing 1,00,000 at a profit of 40%, half of which was on Credit. Current ratio will be:
(A) 3.1:1
(B) 2.4:1 (C) 2.6:1
(D) 2.5:1
Answers
Answer:
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Explanation:
Given,
Current liabilities = Rs-1,75,000
Current Ratio = 2:1
If 30,000 is paid to a creditor it will reduce both current assets as well as current liabilities as cash is being paid and creditors are reduced. Hence, new ratio will be:-
Current Ratio = Current Assets
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Current liabilities
= 3,50,000 (WN 1) - 30,000
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1,75,000 - 30,000
= 3,20,000
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1,45,000
= 2.2 : 1
Working note 1) = Current assets
Current Ratio = Current Assets
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Current liabilities
Current Assets = Current liabilities x current ratio
= 1,75,000 x 2
= 3,50,000.