Question

Current ratio of the farm is force 4 and working capital 200000 .calculate current assets

Answer 1

Current Ratio is a ratio of current assets and current liability so if the current ratio is 4 that means current assets are 4 times of current liabilities.

In this scenario the difference of both is 200000 so we can solve it as below:-

Working Capital = Current Assets - Current Liabilities

Current assets/ Current Liabilities = 4

So, Current assets = 4(Current Liabilities)

If we put this value in working capital formula we get:-

4(Current Liabilities) - Current Liabilities = 200000

3(Current Liabilities) = 200000

Current Liabilities = 200000/3 = 66666.67

So Current assets would be = 66666.67 * 3 = 266666.67