Discussion
If the current ratio is 2 : 1 and working capital is ₹ 60,000, what is the value of the Current Assets ?
Answer: C
The current assets are Rs 1,20,000. A current ratio of 2 : 1 means that current assets are twice the current liabilities. Working capital is the difference, so it equals the current liabilities, which are therefore Rs 60,000.
\[ \text{CA} = 2 \times \text{CL} = 2 \times 60{,}000 \]\[ \text{CA} = 1{,}20{,}000 \]Rs 60,000 is both the working capital and the current liabilities, not the current assets. Rs 1,00,000 and Rs 1,80,000 would imply working capital of Rs 50,000 and Rs 90,000 at a 2 : 1 ratio, so they do not fit.
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