Discussion
ABC Ltd. has a current ratio of 1.5 : 1 and net current assets of ₹ 5,00,000. What are the current assets ?
Answer: C
The current assets are ₹ 15,00,000.
With a current ratio of 1.5 : 1, write current liabilities as \(x\) and current assets as \(1.5x\). Net current assets (working capital) are the difference:
\[ \begin{aligned} 1.5x - x &= 5{,}00{,}000 \\ x &= 10{,}00{,}000 \\ 1.5x &= 15{,}00{,}000 \end{aligned} \]
₹ 10,00,000 is the current liabilities, not the assets, and ₹ 5,00,000 is the working capital itself.
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