Question : The current ratio of the company is 5:2. If its working capital is Rs 1,20,000 its current liabilities will be
Option 1: Rs 80,000
Option 2: Rs 40,000
Option 3: Rs 1,00,000
Option 4: None of the above
Answer (1)
25th Jan, 2024
Correct Answer: Rs 80,000
Solution : Answer = Rs 80,000
C.ratio = 5:2; Working Capital = 1,20,000
C.Ratio = $\frac{ C.A.}{C.Liab}$= $\frac{5}{2}$
2 C.A. = 5 C.Liab.; C.A. = 2.5 Current Liab.
Working Capital = C.A. - C.liab
Current Liab = $\frac{1,20,000}{2.5}$= 80,000.
Hence, the correct option is 1.
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