Current Ratio of a Company is 2 5 1 If its working capital is Rs60 000 its current liabilities will ...........

Current Ratio of a Company is 2.5 : 1. If its working capital is Rs60,000, its current liabilities will be :

Rs40,000

Rs60,000

Rs1,00,000

Rs24,000

- The current ratio is calculated as Current Assets divided by Current Liabilities.

- A current ratio of 2.5:1 means Current Assets are 2.5 times Current Liabilities.

- Working capital is Current Assets minus Current Liabilities, given as Rs 60,000.

- Let's denote Current Liabilities as X. Then, Current Assets would be 2.5X.

- Formula: Working Capital = Current Assets - Current Liabilities

$$ 2.5X - X = 60,000 $$

$$ 1.5X = 60,000 $$

$$ X = 60,000 / 1.5 = Rs 40,000 $$

- Option 1: Rs 40,000 is indeed the Current Liabilities.

- Option 2: Rs 60,000 is incorrect as it would make Current Assets Rs 150,000.

- Option 3: Rs 100,000 is incorrect for the same reason.

- Option 4: Rs 24,000 is too low, making the working capital higher than mentioned.

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