Question

If the current ratio is 2:1 and the working capital is Rs 60000,what is the value of current assets

Answer 1

Formula, explanation, example and interpretation of current ratio. ... Current ratio is also known as working capital ratio or 2 : 1 ratio. It is the ... Debentures, 60,000, Goodwill, 20,000

Answer 2

Explanation:

Current ratio = $\frac{Current \: Assets}{Current \: Liabilities} = \frac{2}{1}$

Current ratio= 2:1 (given)

Let,

Current Liabilities = x

Current Assets = 2x

Working capital = Rs. 60,000

Working capital = Current Assets - Current Liabilities

60,000 = 2x - x

60,000 = x

x = 60,000

Current Liabilities = Rs. 60,000

Current Assets = 2x

= 2 × 60,000

= 1,20,000

Current Assets = Rs. 1,20,000

Hence, the Value of Current Assets is Rs. 1,20,000