Question

The ratio of current asset rupees 600000 to current liabilities rupees 400000 is 1.5 is . The Accountant of the firm is interested in maintaining a current ratio of 2:1 by paying of a part of the current liabilities.
Compute the amount of current liabilities that should be paid so that the current ratio at level of 2:1 May be maintained.

Answer 1

Answer:

600000-400000=200000

Answer 2

Current ratio

Explanation:

Given:

Current ratio = 2 : 1

New Current liabilities = ?

Old Current liabilities = 400,000

Current assets = 600,000

Computation of current assets:

Current ratio = Current assets / Current liabilities

2 : 1 = 600,000 / New Current liabilities

New Current liabilities = 600,000 / 2

New Current liabilities = 300,000

Paid liabilities = Old Current liabilities - New Current liabilities

Paid liabilities = 400,000 - 300,000

Paid liabilities = 100,000

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