9 :- Current liabilities of a company were Rs 1,75,000 and its Current Ratio was 2 :1. It paid Rs 30,000 to a creditor. Calculate Current Ratio after payment.
Solution :-
Calculation of Current Assets Before Payment
Current Ratio = Current Assets/Current Liabilities
2 = Current Assets/1,75,000
Current Assets = 1,75,000 x 2
Current Assets = Rs 3,50,000
Calculation of Current Assets and Current Liabilities after Payment
Current Assets = 3,50,000 – 30,000 = Rs 3,20,000
Current Liabilities = 1,75,000 – 30,000 = Rs 1,45,000
New Current Ratio after Payment = Current Assets after payment/Current Liabilities after Payment
= 3,20,000/1,45,000
= 2.21 : 1