GENERAL KNOWLEDGE

GK

ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
If the current ratio is 2 : 1 and working capital is Rs. 60,000, What is the value of the current assets?
A
Rs. 1,00,000
B
Rs. 1,20,000
C
Rs. 1,40,000
D
Rs. 1,60,000
Explanation: 

Detailed explanation-1: -Now, C.A = 2 x 60000 = Rs. 120000.

Detailed explanation-2: -Generally, a working capital ratio of less than one is taken as indicative of potential future liquidity problems, while a ratio of 1.5 to two is interpreted as indicating a company is on the solid financial ground in terms of liquidity. An increasingly higher ratio above two is not necessarily considered to be better.

Detailed explanation-3: -Answer: The Current Assets is Rs. 1, 00, 000 and Current Liabilities is Rs. 40, 000.

Detailed explanation-4: -Working capital = current assets – current liabilities. Net working capital = current assets (minus cash)-current liabilities (minus debt). Operating working capital = current assets – non-operating current assets. Non-cash working capital = (current assets – cash) – current liabilities.

There is 1 question to complete.