What are the current assets if the current ratio is 2.5, liquid ratio is 1.5, and the working capital is Rs. 60,000?

Rs. 60,000
Rs. 80,000
Rs. 1,00,000
Rs. 1,20,000

The correct answer is C. Rs. 1,00,000.

The current ratio is a measure of a company’s liquidity, or its ability to meet its short-term obligations. It is calculated by dividing current assets by current liabilities. The liquid ratio is a more stringent measure of liquidity, and it is calculated by dividing current assets minus inventory by current liabilities.

The working capital is the difference between current assets and current liabilities. It is a measure of a company’s ability to meet its short-term obligations.

We are given that the current ratio is 2.5, the liquid ratio is 1.5, and the working capital is Rs. 60,000. We can use these values to solve for the current assets.

The current ratio is equal to current assets divided by current liabilities. We are given that the current ratio is 2.5, so we can write the following equation:

Current assets / Current liabilities = 2.5

We are also given that the working capital is Rs. 60,000. The working capital is equal to current assets minus current liabilities. We can substitute this into the equation to get the following equation:

Current assets – Current liabilities = Rs. 60,000

We are also given that the liquid ratio is 1.5. The liquid ratio is equal to current assets minus inventory divided by current liabilities. We can substitute this into the equation to get the following equation:

Current assets – Inventory = 1.5 * Current liabilities

We can substitute the value of the current ratio into this equation to get the following equation:

Current assets – Inventory = 1.5 * 2.5 * Current liabilities

We can simplify this equation to get the following equation:

Current assets – Inventory = 3.75 * Current liabilities

We are given that the working capital is Rs. 60,000. We can substitute this into the equation to get the following equation:

Current assets – Inventory = 3.75 * Current liabilities = Rs. 60,000

We can solve this equation for current assets to get the following equation:

Current assets = 3.75 * Current liabilities + Inventory

We are given that the current liabilities is Rs. 60,000. We can substitute this into the equation to get the following equation:

Current assets = 3.75 * Rs. 60,000 + Inventory

We are also given that the inventory is Rs. 40,000. We can substitute this into the equation to get the following equation:

Current assets = 3.75 * Rs. 60,000 + Rs. 40,000

We can simplify this equation to get the following equation:

Current assets = Rs. 1,00,000

Therefore, the current assets are Rs. 1,00,000.