Current Liablilites of a company were ₹1,75,000 and its Current Ratio was 2:1. It paid ₹30,000 to a Creditor. Calculate Current Ratio after payment.

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Solution

Current Liabilities = Rs 1,75,000
Payment of Rs 30,000 to a Creditor will have two effects:

Decrease in Cash by Rs 30,000 and therefore Current Assets will decrease to Rs 3,20,000.

Decrease in Creditors by Rs 30,000 and this will decrease Current Liabilities to Rs 1,45,000.

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Current Liablilites of a company were ₹1,75,000 and its Current Ratio was 2:1. It paid ₹30,000 to a Creditor. Calculate Current Ratio after payment.

Current Liabilities = Rs 1,75,000 Payment of Rs 30,000 to a Creditor will have two effects: Decrease in Cash by Rs 30,000 and therefore Current Assets will decrease to Rs 3,20,000. Decrease in Creditors by Rs 30,000 and this will decrease Current Liabilities to Rs 1,45,000.

Current Liabilities = Rs 1,75,000
Payment of Rs 30,000 to a Creditor will have two effects:

Decrease in Cash by Rs 30,000 and therefore Current Assets will decrease to Rs 3,20,000.

Decrease in Creditors by Rs 30,000 and this will decrease Current Liabilities to Rs 1,45,000.