The correct answer is A. Rs. 1,20,000.
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. A decrease in working capital indicates that a company is having difficulty meeting its short-term obligations.
To calculate the decrease in working capital, we can use the following formula:
Decrease in working capital = Current assets in 2014 – Current assets in 2015 – (Current liabilities in 2014 – Current liabilities in 2015)
= 5,00,000 – 3,20,000 – (3,60,000 – 4,00,000)
= 1,20,000
Therefore, the decrease in working capital is Rs. 1,20,000.
Option B is incorrect because it is the decrease in current assets. Option C is incorrect because it is the decrease in current liabilities. Option D is incorrect because it is the increase in working capital.