Current Ratio is 3.5 : 1. Working Capital is Rs 90,000. Calculate the

1.	Current Ratio is 3.5 : 1. Working Capital is Rs 90,000. Calculate the amount of Current Assets and Current Liabilities.
Answer» Current Ratio = \(\frac {\textit{Current Assets}}{\textit{Current Liabilities}} \) Or, 3.5 = \(\frac {\textit{Current Assets}}{\textit{Current Liabilities}} \) or, Current Assets = 3.5 Current Liabilities (1) Working Capital = Current Assets – Current Liabilities Working Capital = 90,000 or, Current Assets – Current Liabilities = 90,000 or, 3.5 = Current Liabilities – Current Liabilities = 90,000 (from I) or, 2.5 Current Liabilities = \(\frac{90,000}{2.5}\) = 36,000 or Current Assets = 3.5 Current Liabilities = 3.5 × 36,000 = 1,26,000.

Current Ratio is 3.5 : 1. Working Capital is Rs 90,000. Calculate the amount of Current Assets and Current Liabilities.

Answer»

Current Ratio = \(\frac {\textit{Current Assets}}{\textit{Current Liabilities}} \)

Or, 3.5 = \(\frac {\textit{Current Assets}}{\textit{Current Liabilities}} \)

or, Current Assets = 3.5 Current Liabilities (1)

Working Capital = Current Assets – Current

Liabilities Working Capital = 90,000

or, Current Assets – Current Liabilities = 90,000

or, 3.5 = Current Liabilities – Current Liabilities = 90,000 (from I)

or, 2.5 Current Liabilities = \(\frac{90,000}{2.5}\) = 36,000

or Current Assets = 3.5 Current Liabilities

= 3.5 × 36,000 = 1,26,000.