Question

If the current ratio is 2: 1 and working capital is Rs. 60,000, What is the value of the current assets?

Answer 1

Answer:

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

Answer 2

Answer:

The Value of Current Assets is Rs. 1,20,000

Explanation:

Solution :

Current ratio= 2:1

Current ratio =

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

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