Question

Find the value of current assets when Current Ratio is 2.4 and Working Capital is Rs. 1,40,000.

Answer 1

Explanation:

Current Ratio = Current Assets (C.A)/ Current Liabilities (C.L)  = 2/1

So, CA= 2 CL

Now, Working Capital = Current Assets(C.A) minus Current Liabilities (C.L) = Rs.60000

So, C.A - C.L = 60000

       2 C.L-CL = 60000

        C.L = Rs.60000

Now, C.A = 2 x 60000 = Rs.120000