Question

Current ratio of a company is 2:5 its current liability is 300000. The net working capital will be

Answer 1

Given Current Ratio = 2:5

We know that

Current ratio = current assets/current Liabilities


2:5 = Current assets/current Liabilities

subsitute Current Liabilities=300000

2/5 = current assets/300000

300000×2/5 = current assets

120000 = current assets..

so know we have current assets=120000
Current liabilities= 300000

we know that
net working capital= Current Assets -Current Liabilities

net working capital= 120000 - 300000

net working capital= -180000 (its negative)