If the current ratio of a firm is 2.5 : 1 and working capital is Rs. 90,000 then the amount of current liabilities will be

Rs. 2,25,000
Rs. 1,35,000
Rs. 60,000
Rs. 36,000

The correct answer is A. Rs. 2,25,000.

Current ratio is a liquidity ratio that measures a company’s ability to pay its short-term obligations. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates that a company has more liquid assets to cover its short-term obligations.

Working capital is a measure of a company’s short-term financial health. It is calculated by subtracting current liabilities from current assets. A positive working capital indicates that a company has more current assets than current liabilities.

In this case, the current ratio is 2.5 : 1 and working capital is Rs. 90,000. This means that the company has current assets of Rs. 225,000 and current liabilities of Rs. 90,000.

The answer to the question is A. Rs. 2,25,000.

Here is a brief explanation of each option:

  • Option A: Rs. 2,25,000 is the correct answer. This is because the current ratio is 2.5 : 1 and working capital is Rs. 90,000. This means that the company has current assets of Rs. 225,000 and current liabilities of Rs. 90,000.
  • Option B: Rs. 1,35,000 is incorrect. This is because the current ratio is 2.5 : 1 and working capital is Rs. 90,000. This means that the company has current assets of Rs. 225,000 and current liabilities of Rs. 90,000. Therefore, the current liabilities cannot be Rs. 1,35,000.
  • Option C: Rs. 60,000 is incorrect. This is because the current ratio is 2.5 : 1 and working capital is Rs. 90,000. This means that the company has current assets of Rs. 225,000 and current liabilities of Rs. 90,000. Therefore, the current liabilities cannot be Rs. 60,000.
  • Option D: Rs. 36,000 is incorrect. This is because the current ratio is 2.5 : 1 and working capital is Rs. 90,000. This means that the company has current assets of Rs. 225,000 and current liabilities of Rs. 90,000. Therefore, the current liabilities cannot be Rs. 36,000.