Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

A firm's current ratio is 3.5 : 2. Its current liabilities are 80,000. Its working capital will be :

Options:

₹1,20,000

₹1,60,000

₹60,000

₹2,80,000

Correct Answer:

₹60,000

Explanation:

Current ratio is 3.5 : 2.  and Current liabilities are 80,000
Current ratio = Current assets/ Current liabilities
3.5/2 = CA/80000
Current assets = 3.5/2 x 80000
                         = 140000
Working capital = Current assets - Current liabilities
                         = 140000-80000
                         =₹60000