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Question
Current Ratio is 3.5 : 1. Working Capital is Rs 90,000. Calculate the amount of Current Assets and Current Liabilities.
Solution
`"Current Ratio" = "Current Assets"/"Current Liablities"`
`3.5 = "Current assets"/"Current Liablities"`
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 1)
or, 2.5 Current Liabilities = 90,000
`"or.Current Liablities" = "90,000"/"2.5" = 36,000`
`"or.Current Assets" = 3.5 xx "Current Liablities"`
= `"3.5 "xx" 36,000"`
= `1,26,000`
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