Question

The current ratio is 2.5 : 1. Current assets are Rs. 50,000 and current liabilities are Rs. 20,000. How much must be the decline in the current assets to bring the ratio to 2 : 1

Answer 1

Answer:

Decline in Current Assets = 10,000

Explanation:

Current Ratio = Current Assets

                         ----------------------

                          Current Liabilities

Current Liabilities = 20,000

For ratio 2:1 current assets should be = 20 x 20,000 = 40,000

Present Current Assets  = 50,000

Decline = 50,000 - 40,000 = 10,000