Question

Given current ratio = $2.5$
Quick ratio = $1.5$
Net working capital = Rs $30,000$
What is the amount of current liabilities?

• A. $Rs20,000$
• B. $Rs30,000$
• C. $Rs50,000$
• D. $Rs60,000$

Answer 1

Answer: (A)

$Rs20,000$

Net working capital = Current assets - Current liabilities

$Rs.30000$ = Current assets - Current liabilities

Therefore, Current assets = Current liabilities + $Rs.30000$

Current ratio = Current assets/ Current liabilities

$2.5$ = [Current liabilities + $Rs.30000$] / Current liabilities

$2.5$ Current liabilities = Current liabilities + $Rs.30000$

Current liabilities = $Rs.30000/1.5$

Therefore, Current liabilities = $Rs.20000$