The ratio of current Assets (Rs. 600000) to current Liabilities (Rs. 400000) is 1.5:1.The Accountant of the firm is interested in maintaining a current Ratio be 2:1 by paying off a part of Liabilities. Calculate the amount of Current Liabilities that should be paid.

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Ankita Gupta

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Current assets/current liability = 1.5/1 Expected current ratio=2:1 So to get this Ratio by paying off some of the liabilities we need to know If current asset 600000 is equal to ratio 2 then current liability should be 2/2=1 i.e. 600000/2=300000 So liabilities to be paid off = 400000-300000=100000
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Current assets/current liability = 1.5/1 Expected current ratio=2:1 So to get this Ratio by paying off some of the liabilities we need to know If current asset 600000 is equal to ratio 2 then current liability should be 2/2=1 i.e. 600000/2=300000 So liabilities to be paid off = 400000-300000=100000 read less
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The amount paid should be Rs200000 Because by paying Rs200000 current liabilities will reduce and become Rs200000 and as payment is made in cash or by cheque current assets will also reduce by the same amount and become Rs400000 So the ratio of CA:CL=2:1
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that
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IT Security, IT Trainings

INtroduce Capital worth Rs. 1 Lac in cash & pay out one of the current Liabilities from it. New CA=6 Lac & reduced CL=3 Lac makes the ratio 2:1
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