Accountancy Part BAccounting Ratios

A firm's current ratio is 3.5 : 2. Its current liabilities are 80,000…

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

Answer & explanation

Correct answer: option 3

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