Question : A firm had current assets of Rs.3,00,000 It then paid trade payables of Rs.50,000. After this payment, the current ratio was 2.5:1 The amount of Current Liabilities and Working Capital after the payment are ___________.
Option 1: Current liabilities are Rs 1,50,000 and working capital are Rs 2,10,000
Option 2: Current liabilities are Rs 2,10,000 and working capital are Rs 1,50,000
Option 3: Current liabilities are Rs 1,00,000 and working capital is Rs 1,50,000
Option 4: None of the above
Correct Answer: Current liabilities are Rs 1,00,000 and working capital is Rs 1,50,000
Solution : Answer = Current liabilities are Rs 1,00,000 and working capital is Rs 1,50,000.
Current Assets = 3,00,000
Now, Current Assets = 3,00,000 - 50,000 = 2,50,000
New Current Ratio = 2.5:1
C. Ratio= $\frac{\text{Current Assets}}{\text{Current Liab}}$
$\frac{2.5}{1}$= $\frac{2,50,000}{\text{Current Liab}}$
Current liab.= $\frac{2,50,000}{2.5}$= 1,00,000
New Working Capital = New current assets - New current liabilities. = 2,50,000 - 1,00,000 =
1,50,000.
Hence, the correct option is 3.
