Question

If the current ratio is $2:1$ and working capital is $Rs.60,000$, what is the value of the current assets?

• A. $Rs.60,000$
• B. $Rs.1,00,000$
• C. $Rs.1,20,000$
• D. $Rs.1,80,000$

Answer 1

The correct option is C $Rs.1,20,000$

Current Ratio = Current Assets (C.A)/ Current Liabilities (C.L) = $2/1$

So, CA= $2$ CL

Now, Working Capital = Current Assets(C.A) minus Current Liabilities (C.L) = $Rs.60000$

So, C.A - C.L = $60000$

$2$ C.L-CL = $60000$

C.L = $Rs.60000$

Now, C.A = $2$ x $60000$ = $Rs.120000$