The current Ratio of a firm is 2.5: 1 an

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Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

The current Ratio of a firm is 2.5: 1 and its Current Liabilities are ₹4,00,000. What will be its Working Capital?

Options:

₹1000000

₹500000

₹400000

₹600000

Correct Answer:

₹600000

Explanation:

Current ratio = 2.5:1
CA/CL = 2.5/1
CA/400000= 2.5/1
CA= ₹1000000
WORKING CAPITAL= CA-CL
= 1000000-400000
=₹600000